US Invests $5bn in R&D to build homegrown AI chips supply

By Marcus Law & Sean Ashcroft
The United States is to invest over US$5bn in semiconductor-related R&D
AI chip supply problems see US invest over US$5bn in semiconductor-related R&D as it seeks to keep pace with the rising demand for AI-capable chips

The US is to invest over US$5bn in semiconductor-related R&D, amid ongoing chip supply chain problems, prompted in part by the rapid adoption of generative AI.

A rapid rise in demand in AI has led to a global shortage of chips - which are used to train the latest large language models.

With the vast majority of these chips manufactured in Asia – particularly in Taiwan – last year Taiwan Semiconductor Manufacturing Company (TSMC) Chairman Mark Liu suggested that supply constraints on AI chips could take about 18 months to ease, due to limited capacity in advanced chip packaging services. 

The company - the world’s largest chipmaker - is the sole manufacturer for Nvidia's H100 and A100 GPUs, which power AI tools like ChatGPT.

Semiconductors were invented in America and serve as the backbone of the modern economy. But today, the United States produces less than 10% of global supply and none of the most advanced chips. 

To change this, the Biden administration is to invest billions in the National Semiconductor Technology Center (NSTC), established as a public-private consortium, and other CHIPS Research and Development (R&D) priorities.

The NSTC initiative follows on from the wider US Department of Commerce (DoC) strategic vision to strengthen the US semiconductor supply chain.

From 2023, the DoC announced a funding opportunity and application process for large semiconductor supply chain projects. 

Large semiconductor supply chain projects include materials and manufacturing equipment facility projects with capital investments of $300mn and above. Smaller projects fall below that threshold.

The move is part of the CHIPS for America investments. 

The CHIPS for America Act was signed into law in January 2021, and provides funding and incentives to support semiconductor research, development, and manufacturing in the US. Its goal is to strengthen the country's semiconductor industry, and ensure its competitiveness in the global market.

Despite US companies designing the world’s leading chips, since the 1990s America’s share of the global semiconductor market has fallen from 37% to around 12% in 2020. 

Following the global shortage of semiconductor chips, halted by restrictions during the coronavirus pandemic – together with continuing geopolitical tensions between China and Taiwan – a number of global companies have begun exploring manufacturing chips in the US, taking advantage of funding from the US CHIPS Act to build new or expanded fabs across the country.

In 2022 Intel said it was planning to invest more than US$20bn in the construction of two new leading-edge chip factories in Ohio to boost production to meet the demand for advanced semiconductors. 

Intel says the ‘mega site’, just outside Columbus, can accommodate a total of eight chip factories as well as supporting operations and ecosystem partners.

TSMC meanwhile announced in 2020 its plans to build one or more chip plants in Arizona, while Idaho-based Micron Technology has a planned investment of US$150bn in the production of memory chips over the next 10 years.

******
Check out the latest edition of Supply Chain Digital and also sign up to our global conference series: Procurement & Supply Chain 2024. ​​​​Supply Chain Digital is a BizClik brand.

Share

Featured Articles

Etihad Cargo’s Bold Bid to Increase Global Capacity

Etihad Cargo, the cargo and logistics arm of Etihad Airways, is expanding in a bid to offer comprehensive air cargo solutions to its customers

CGI: AI Already a Key Area of Focus for Supply Chain Leaders

CGI's Future of Supply Chain survey finds AI is already a key area of focus for industry leaders as they look to navigate further uncertainty

Three Months Until Procurement & Supply Chain LIVE London

In three months, Procurement & Supply Chain LIVE returns to the BDC in London for an in-person event focused on the latest in procurement and supply chain

Procurement & Supply Chain LIVE Announces Chicago Event 2025

Digital Supply Chain

Mars Snacking's Amanda Davies on Sustainability at P&SC LIVE

Sustainability

DP World: Delivering the ICC Men’s T20 Cricket World Cup

Logistics