Microchips are becoming more prevalent in common objects, including cars, washing machines, and even phones and laptops. A stimulus plan was approved by the governor last week to restore the supply chain after the pandemic’s interruptions.

Workers inside the clean room of U.S. semiconductor manufacturer SkyWater Technology, where computer chips are made, in Bloomington, Minnesota, in April 2022 (Source: Reuters)

US Ventures in Microchip Production

According to Texas Tribune, supply chain interruptions in the semiconductor industry during the pandemic alarmed leaders in the sector and their Texas allies. The state is now trying to seize the chance presented by the lessons it has learned over the last three years. To draw in fresh capital, land lucrative federal grants, and generate thousands of well-paying jobs over the following ten years, Texas is investing $1.4 billion in microchip research, production, and manufacturing programs.

The Texas CHIPS Act, which will establish the Texas Semiconductor Innovation Fund and provide matching funds to universities and other state organizations investing in microchip production and design projects, was approved by Governor Greg Abbott on Thursday. This year, lawmakers allocated $698.3 million for the new fund as well as an extra $666.4 million for the establishment of cutting-edge research and development facilities at Texas A&M University and the University of Texas at Austin. The investment demonstrates the state’s dedication to the national competition for federal funds for the industry worth billions of dollars.

President Joe Biden signed the federal CHIPS and Science Act in August of last year, investing $52 billion to support domestic semiconductor production. The law aims to promote private investment in the industry by providing companies with subsidies for new or expanded production facilities as well as for new R&D initiatives.

According to industry analysts, states have a part to play in the federal government’s strategy, particularly in terms of the creation and training of the required personnel. Texas also stands out on a national level because it already has one of the strongest semiconductor ecosystems.

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Microchip Manufacturing Plants in the US Soon

The federal CHIPS Act aims to promote the “reshoring” of microchip production or the relocation of chip factories domestically. The United States is significantly dependent on imports of chips, particularly from Taiwan and South Korea. Alarms have also been raised regarding the potential impact of a Chinese invasion of Taiwan, a region that has proclaimed its independence and has its government but which Beijing still views as a part of China. This invasion may have a negative influence on the supply of semiconductors.

By the end of the decade, experts in the field predict that the federal CHIPS Act will produce 100,000 new, well-paying jobs in the United States through microchip production and design. The policies of each state have a significant impact on where investments and jobs are created.

According to the Semiconductor Industry Association, semiconductor production firms have already committed $215 billion in investments and the creation of 40,000 new jobs nationwide in response to the federal CHIPS Act. In Texas, where six projects that would generate 8,000 employments in the sector have already been announced, sixty billion of these investments will be made. After Arizona, Texas has the second-highest number of projects planned.

Two of the Texas projects will build brand-new semiconductor production fabrication, also referred to as microchip production and manufacturing plants. One will be constructed by Samsung Electronics in Taylor, representing a $17.3 billion investment that will generate 2,000 employees, and the other by Texas Instruments in Sherman, representing a $30 billion project that will employ 3,000 people between now and 2035. Another three, including Texas Instruments in Richardson, NXP in Austin, and X-FAB in Lubbock, are enlarging already-existing semiconductor facilities. In Sherman, a Global Wafers production plant for silicon wafers will be constructed as the final project.

There are now 54 microchip production plants in the state. According to the Semiconductor Industry Association, Texas has the second-largest employer in the sector, only behind California, with around 45,000 employees. By 2030, the state hopes to take the top spot.

The Texas Institute for Electronics, a public-private collaboration established in 2022 and planning to become a nonprofit, independent corporation this year, will house the fabs that UT-Austin will get $440 million to build. TIE concentrates on the packaging process, which is the production of the shells that house microchips.

In addition to $26.4 million for the Center for Quantum Computing, Texas A&M will receive $200 million to create fabs for manufacturing quantum and artificial intelligence chips. According to Texas A&M Vice Chancellor for Research Yossef Elabd, the next generation of chips will be developed by Microdevices and Systems.

“We are focused on the new chemistry, the new materials, the new processes, and the next version of the chip,” Elabd stated.

The facilities at both colleges will put more of an emphasis on testing out innovative products that adhere to market requirements and educating the next generation of technicians, engineers, and business leaders than on producing chips for commercialization. UT-Austin and Texas A&M are receiving comments from semiconductor businesses regarding the facilities they should create and the courses they should require of their students to prepare them for careers in the industry.

Texas, according to Elabd, is well-positioned to draw fresh investment and federal funding. Texas is a very business-friendly state, the majority of semiconductor businesses are already based there, and Texas A&M is the top engineering school in the nation. The optimum location for expanding chip manufacture is there, he claimed. The $1.4 billion investment sends an incredibly strong signal to the entire community that Texas intends to set the standard.

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