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Chips

Chipping Away at the Backlog

March 22, 2022
As the hype subsides, the hard work of semiconductor manufacturing and testing remains.

The fevered excitement following Intel’s January announcement that it would start construction on a $20 billion semiconductor manufacturing campus near Columbus, Ohio generated sound bites and adjectives reminiscent of 1960s space launches.

Intel CEO Pat Gelsinger called the new Ohio plant “a new epicenter for advanced chipmaking in the U.S.” As Electronic Design reported in January, Intel expects to start construction this year on the manufacturing plants, and there are ambitious plans to expand manufacturing capacity beyond the initial 100 acres announced at the event. The investment could grow to 200 acres and $100 billion over time, Gelsinger said. It also adds to Intel’s manufacturing network in Oregon and Arizona.

President Joe Biden said the announcement moves the manufacturing of chips closer to their origins—and to their customers. “America invented these chips and federal research and development led to the creation of these chips,” Biden said at the press conference announcing the factory project launch.

When the press conference was over, the excitement lingered but the hard realities set in like winter in Ohio. Production wasn’t expected to begin at the new Intel plant until at least 2025. The global semiconductor shortage remains a drag on global manufacturing growth. The supply chain still is recovering from the pandemic, the existing geopolitical challenges and now the uncertainty over the war in Ukraine.

There was hype, and there is hope, but there is no immediate help.

Developing the Workforce

In an interview with Industry Week in March, Mark Granahan, CEO and founder of iDeal Semiconductor in Bethlehem, Pa. said that simply manufacturing more chips in the U.S. is only one factor in the challenges for the future.

“Maybe the next question is, where are they going to be packaging and testing these products? Because if they have to send that overseas, it really doesn’t help the supply chain as much as it should,” Granahan said. “As technology becomes more advanced, it’s less about actual labor cost, and more about the technical expertise to actually manufacture and build the products.

“These factories, once they’re up and running, will be producing chips for 20-plus years, at least,” Granahan added. “And so, as we move into the latter part of this decade, next, having that assembly and test capability in the U.S. will be a really strong calling card for U.S. supply chain base.”

A new wave of workers will be needed to deliver on the longer-term promise of the success at Intel’s Ohio plant and the others that may follow. “It will be operators, basically hourly individuals that will definitely need training, but a lot of that training can be on the job. Then there will be technicians, the next level up in terms of education. Most will likely need a two-year degree or some type of associate’s degree, in equipment, maintenance, electronic electronics, chemistry,” Granahan noted.

“The good news is this will be an across-the-board opportunity for people who don’t necessarily have a college degree all the way up to very advanced Ph.D. types of types of individuals in the areas of chemistry material science, metallurgy, ceramics, polymers, physics, electrical engineering—a pretty wide range of engineering functions will be necessary,” he added.

Restoring and Reshoring

In his press conference, Intel’s Gelsinger said the Ohio facility marked “another significant way Intel is leading the effort to restore U.S. semiconductor manufacturing leadership. Intel’s actions will help build a more resilient supply chain and ensure reliable access to advanced semiconductors for years to come.”

Part of that challenge is to bring not just the design and manufacturing but also the testing closer to the end users in North America. To do that, Granahan suggested, it would take further investment from Intel, and from others.

“Most assembly and testing for the industry is in Asia. And trading and expanding that type of capability in the Americas would be a really good thing,” he said. “I believe it’s going to take some initiative by the federal government to start talking about, and putting money towards expansion of that capability here in the Americas.

“Clearly, this supply of semiconductors here in the U.S. as it expands, it creates more and more of the conditions for having the total supply chain in the in the Americas, as opposed to sending stuff overseas all the time,” Granahan added. “It’s not taking away from Asia; it’s actually adding more capability and capacity here in the Americas.”

That remains an elusive goal. New products, new markets and new communication protocols will require more chips now. As the world shifts to a more robust regional and local supply chain strategy, the next challenge is to reduce the current backlog of production, and Intel’s announcement—while significant—won’t resolve the current issues.

The federal government has proposed $52 billion in additional funding for semiconductor manufacturing, and Granahan knows where he’d like to see it spent. “I'm hoping that a lot of that $52 billion goes towards more advanced research so that we can stay ahead. The U.S. is actually behind; (Taiwan Semiconductor Manufacturing Corporation) has surpassed Intel in terms of their technology performance,” he said. “I’d like to see funding go toward advanced research in very high-performance areas like silicon and advanced materials.”

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