America's Microchip Resurgence Runs Through New York
(Bloomberg Opinion) -- As the U.S. economy continues to recover from Covid-19, one critical shortage in the global supply chain is touching every aspect of our lives: a severe lack of microchips.
The U.S. Senate, under the leadership of Majority Leader Chuck Schumer of New York, has passed bipartisan legislation containing provisions for the CHIPS Act, which stands for Creating Helpful Incentives to Produce Semiconductors for America. It would invest $52 billion to create a pipeline of chip manufacturing across the country. It would also form a National Semiconductor Technology Center that would bring together leaders in industry, academia and government to put the U.S. back in the lead in semiconductor research and development.
CHIPS is that rare thing: a significant bill with true bipartisan support. Now it is up to the House to pass companion legislation, quickly. Expanding the U.S. semiconductor industry isn’t a moonshot — and New York State can play a large role.
Americans are struggling to buy everything from automobiles to cell phones to home appliances. Devices run by semiconductors are vital for doctors and first responders; they protect the integrity of the financial industry and are a key driver of America’s global competitiveness and national security. Industry estimates suggest chip manufacturing accounts for over 250,000 direct and nearly 1.6 million indirect jobs nationwide.
Several elements are contributing to the chip shortage, but a lack of domestic production is a driving factor. As we experienced more broadly during the Covid epidemic, when critical supplies are scarce, national borders matter and reliance on imports is costly.
According to the Semiconductor Industry Association, the U.S. share of semiconductor manufacturing shrank from 37% in 1990 to just 12% today. The proliferation of overseas chip fabrication plants has been accelerated by government subsidies. China is investing an estimated $150 billion into new fabrication plants over 10 years to reach national self-sufficiency. South Korea, Japan and the European Union are stepping up efforts to secure their own production. And the global leader, Taiwan, also provides state subsidies. The U.S. must compete, and federal incentives have a role.
New York has been preparing to meet this moment for decades. As a lifelong New Yorker, I have seen the effects that the loss of domestic manufacturing in all sectors has had on families, especially upstate, where such jobs were the lifeblood of many communities.
New York has been a leader in computing design, development and manufacturing since the opening of IBM’s Watson Computing Laboratory in 1945 in New York City. More recently, the state has invested hundreds of millions of dollars under a succession of governors and legislatures into developing shovel-ready sites for chip plants — more than any other state in the nation.
New York has built the necessary complex infrastructure, including low-cost, reliable power and plentiful water and wastewater capacity. For example, over the last decade, GlobalFoundries Inc. has invested $15 billion in its semiconductor plant in Malta, New York, and recently announced plans to build a second factory on the same campus. But that may depend on CHIPS passing.
In addition to its potential for manufacturing sites, New York is the logical headquarters for the act’s National Semiconductor Technology Center. The multibillion-dollar Albany Nanotech Complex, affiliated with the State University of New York, is the most advanced, publicly owned, 300-millimeter semiconductor R&D facility in North America. Global industry leaders like IBM, Applied Materials Inc., Tokyo Electron Ltd., Intel Corp. and Wolfspeed Inc. collaborate every day with state engineers and scientists on technological breakthroughs, such as IBM’s recent development of the world’s first 2-nanometer chip.
The House needs to follow the Senate’s lead, pass CHIPS and make the U.S. again the global leader in chip manufacturing. New York is ready to do its part.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Kathy Hochul is the governor of the state of New York.
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