As the pandemic put an increase demand on smartphones, laptops, and other devices that require semiconductors, many companies are struggling to secure the component needed to build their products — resulting in major delays and increased pricing across multiple industries (automakers, electronic consumer products, etc).
Earlier this year, Intel launched a foundry business called Intel Foundry Services which will lead the work to domestically design and manufacture computer chips that are required by critical Department of Defense (DoD) systems, as part of a new US Government project.
Intel’s chip-making deal is part of the DoD’s RAMP-C program to establish a domestic commercial foundry. The RAMP-C program will ensure that the Pentagon has access to critical semiconductor technology and is also designed to strengthen overall supply chain security, keeping the U.S. on top of the latest advances in chip design, manufacturing, and packaging.
Earlier this year, the U.S. Senate took a significant step toward this goal by passing the U.S. Innovation and Competition Act (USICA) (S.1260), which includes $52 billion in federal investments for the domestic semiconductor research, design, and manufacturing provisions in the CHIPS for America Act.
According to the Semiconductor Industry Association, the U.S. held 37% of the global chip manufacturing capacity in 1990, a number that has gone down to 12%. Historically, companies preferred to design their own semiconductors and outsource the manufacturing process to third party foundries in Asia.
Manufacturing completely finished semiconductors for customers is no easy task — it takes at least 26 weeks, according to SIA. The process leaves only a handful of companies running the foundries in which most of the world’s computer chips orders are placed. Most of the world’s total semiconductor manufacturing capacity comes from China, Japan, South Korea and Taiwan.
As the semiconductor shortage is expected to last well into 2022, Intel’s chip-making deal means a more robust semiconductor ecosystem is coming back to U.S. The company plans to invest $20 billion to build out two new semiconductor factories at its Ocotillo campus in Chandler, Arizona this year.