Enable breadcrumbs token at /includes/pageheader.html.twig

Securing U.S. Semiconductors: Challenges and Solutions

The U.S. chip supply chain will need a strategic reserve and greater investments to increase its independence.

The panel Semiconductors and Microelectronics at TechNet Emergence. Photo credit: Diego Laje, AFCEA.

Building a business ecosystem to give the United States greater independence in the semiconductors supply chain is tougher than passing a law or secure funds, according to experts.

“We have a hybrid manufacturing model in semiconductors where we do about 50% of our volume in our internal fabs, and about 50% of our volume at external partners worldwide,” Bryan Goldstein, vice president of the Aerospace and Defense unite at the semiconductor Analog Devices, said during AFCEA International's inaugural TechNet Emergence conference in Reston, Virginia.

Analog Devices’ diversification and onshoring of its production happened after the COVID-19 pandemic limited trade around the world. Nevertheless, a defense contractor presented a potential challenge in case of another disruption.

“What if there's a shutdown of trade lanes?” asked Clark Dumont, senior director of Supply Chain atBAE Systems.

Addressing these concerns, the U.S. government signed the CHIPS Act into law in August 2022. Since then, suppliers receive funding to onshore their operations after decades of transferring portions of the supply chain overseas, including to adversarial countries. Experts speaking at the conference also agreed that COVID-19 was a shock that stressed the importance of moving operations back to the United States and friendly nations.

“The most economically usable way is to rely on our friendly foreign countries, countries like Japan, countries that are stable and have deep ties to the U.S.—and there's a handful,” said Guy Eristoff, senior vice president, Tower Semiconductor.

One participant noted that beyond chips, the containment units—or packaging—of these processors is a segment where North America has almost no local supply.

What if there's a shutdown of trade lanes.

Clark Dumont

Senior director, Global Electronics Supply Chain, BAE Systems.

“There's only 2[%] or 3% of packaging that was done on-shore,” said Stephane Tremblay, chief operating officer and site location executive at the IBM facility in Bromont, Canada, the largest chip assembly and testing facility in North America, according to the company.

“What was true for semiconductors is also obviously true for packaging … any wafers need to be interconnected,” Tremblay said.

“To create that packaging, we also need strong ecosystems, to support innovation,” Tremblay added.

Goldstein offered three steps to help the semiconductors ecosystem return to the United States in force, especially for defense applications.

These are:

Planning, to allow the defense supply chain enough time to strategize capital investments
Resiliency, creating more production capacity and alternatives
A strategic wafer reserve

“Semiconductors have become a critical commodity, a strategic commodity like oil. We believe that if there was some sort of strategic reserve, that is in the government's best interest to consider,” Goldstein told the audience.

Wafers, the silicon material where chip manufacturers print their products, have a high degree of flexibility prior to final industrialization and can be geared toward different final products, according to Goldstein.

Ted Glum, former director of the U.S. Defense Microelectronics Activity, moderated the panel of industry experts.