Members of the semiconductor industry are almost always positive about the prospect of receiving government subsidies of $52 billion through the CHIPS Act for fabs and workforce development but some critiques and concerns of the act surfaced during keynote panel session at Sensors Converge 2023 on Thursday.
Among the concerns, industry executives said they felt the total dollars will be far too low to meet demands for new fabs in the next decade. The CHIPS Act incentives for new fabs plus similar incentives offered by European nations will together total less than what the South Korean government is offering to support its chip industry, they said.
“Other countries are funding a lot more,” said Vincent Arena, senior director of the global sensor business at Avnet. “After the CHIPS Act was signed, both Intel and Micron announced investing billions each in fabs, more than we’ve done before. The act is a good start, but we need to do more to help drive the infrastructure and the process.”
Arena was also concerned that the US government investment is primarily going to fabs for creating new chips, but not for back-end work such as packaging and testing of chips—a major effort in making them available for customer use. “We will be in a world of hurt,” he said, noting that more than 70% of that back-end work will remain in Asia and primarily in China and Taiwan.
“The global economy will still depend on that one region,” he said.
Also, in the US, the panelists were concerned the CHIPS Act is focused on producing the most advanced nodes, less than 5 nm, but some of the nation’s biggest needs are still going to be to produce nodes at 28 nm or higher used in older technologies in automotive and other industries.
The US will be “investing in bleeding edge chips and it’s the 28 nm and higher legacy chips that we need and are going to need,” Arena said.
To drive home the point about which chips are needed, Marcellino Gemelli, general manager of automotive electronics for a Robert Bosch, asked audience members to raise their hands if they were affected by chip shortages during the pandemic and at least half the audience of industry officials and engineers raised their hands. Of those who raised their hands, he asked how many experienced a shortage of 12 nm or smaller nodes, but none did so.
Then, he asked how many were short of chips larger than 12 nm, and many of the original group raised their hands to show the point that larger nodes are needed and were affected by the shortages.
Gemelli also warned that operating a fab is complex but as new fabs are built they will need to be right-sized to run efficiently or costs could double. Fabs need to run at more than 90% of utilization to run efficiently, but at 70% utilization, the cost of goods will double. “Fabs are always living on the edge,” he said. “It’s a curse.”
Panelist Justin Mortimer, general manager for industrial/IoT at NXP’s Secure Connected Edge, said his company has tried to manage chip supply uncertainty when the lead time for obtaining a component or chip can vary widely. Instead, NXP has focused on building modules of components and system modules. “That way small companies don’t need to buy piece parts,” he said.
For the most part, Mortimer said the US focus on reducing the chip shortage and the CHIPS Act have had a positive impact on NXP, especially in Austin, Texas, where the company operates two factories.
“There’s a significant amount of focus to expand capacity in Austin for microcontrollers to consolidate operations from overseas,” he said. “It has led to a huge amount of pride by employees to build more and more in Austin. People are excited to build more in our factories.”
The keynote panel was moderated by Guneet Bedi, general manager at Arduino, who said Arduino has faced component shortages in recent years, although the situation has improved of late.
One benefit of the chip shortage was it raised public and policymaker awareness about the importance of chips, panelists said. “It’s extremely challenging to build breakthrough products, and some can take up to a a year,” Mortimer said. “That was not really well appreciated in prior years. There’s a lot more appreciation of how complex the supply chain is.” wrist wearabes for industrial uses to embedded engineers at Sensors Converge
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