Nvidia’s latest results, shown on Wednesday, revealed the high demand for semiconductors needed to power new AI systems and the concern that the supply may struggle to keep up. This has created a pressing need for the US to revitalize chip manufacturing over the next few years.
Currently, the Biden administration is in the early stages of a series of announcements about how it plans to invest $50 billion in taxpayer dollars to ensure that America stays ahead in the semiconductor race. One likely beneficiary is Intel (INTC), which is constructing a new factory in Ohio and in talks for up to $10 billion of government funding.
Commerce Secretary Gina Raimondo made a virtual appearance at Intel on Wednesday, emphasizing her focus on AI.
Other major players in AI chip manufacturing, as well as Intel, are also expected to receive billions and are currently in discussions with the government.
Three smaller manufacturing awards have already been promised to BAE Systems (BAESY), Microchip Technology, and GlobalFoundries (GFS). The administration also recently announced a probable award of $5 billion for a public-private consortium called the National Semiconductor Technology Center to coordinate the administration’s research efforts.
An Effort to ‘Try to Spread Their Bets’
Raimondo leads a team of more than 200 people charged with implementing the CHIPS and Science Act, which is designed to address America’s declining share of semiconductor manufacturing. Raimondo’s CHIPS Strategy Office consists of scientists, supply chain and workforce specialists, and others.
The US chip manufacturing accounted for nearly 40% of the world’s chips in 1990, but today, less than 10% are made in the US. The situation is even worse for the world’s most advanced semiconductors, all of which are manufactured overseas. Industries are also facing the issue of chip design and manufacturing AI, where the US is now positioned but could quickly be disrupted.
For instance, AI has brought new participants into the chip business, with Google and Amazon showing interest in designs to power their AI initiatives. The US government’s approach to aid the chip manufacturing and AI design could potentially reshape the industry.
Intensive negotiations are currently taking place with major applicants, promising further announcements within weeks.
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