Image Source: Washington Post
Written by: Abdullah Al-Ejel
September 12th, 2022
Despite 2 years of combating Covid-19 and creating a successful vaccine, the negative effects on the technology industry continue to linger, specifically in the production of chips.
Chip demand from automotive companies tanking due to lockdowns, the US-China ‘tech war’, rising demands for personal devices & electronics, labor shortages, and production decline are some of the many factors causing a global chip shortage. A large source of chip production comes from China, so after increased regulations and tariffs on China, and with China heavily investing into their own tech industry, concerns over China’s aim to become less reliant on the US have grow.
To counteract chip production decline and China’s goal for technology independence, Congress passed the “CHIPS Act”, a bill aimed at semiconductor manufacturing grants, research investments, and an investment tax credit for chip manufacturing. Specifically, the bill will provide billions of dollars across many years to US-based, semiconductor manufacturers. This bill will be a huge step in reducing America’s reliance on China/Asian manufacturers, hoping to decrease the negative consequences of potential future trade conflicts.
As part of the CHIPS act, Intel could receive $10 to $15 billion in government subsidies over the next 5 years and will utilize these subsidies to develop a new manufacturing plant in Ohio, which celebrated its groundbreaking on September 9. Projected to open in 2025, not only will this development work towards increasing chip supply, but will also bring new jobs to Ohio. “The company has said that the project could take more than 7,000 workers to build the facility that is expected to house two separate factories and, once finished, employ 3,000 workers.” (The Verge)
Countries around the globe aim to break out of the chip shortage by the end of this year, but it's projected to continue through 2023, possibly even 2024 (CNBC). Hopefully, the CHIPS Act will help end the shortage sooner than expected.
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