Source: Will Hunt, “Sustaining U.S. Competitiveness in Semiconductor Manufacturing“ (Center for Security and Emerging Technology, January 2022).
Commentary: The CHIPS for America Act shows important awareness from government that the United States needs a course correction in semiconductors. However, with billions of dollars authorized to stimulate the U.S. semiconductor industry, CHIPS incentives must be carefully targeted towards types of semiconductor capacity. A recent report from the Center for Security and Emerging Technology (CSET) finds that a key capacity to be targeted by CHIPS funding is dynamic random-access memory (DRAM) chip manufacturing. DRAM is a kind of computer RAM found in most modern laptops and desktops utilized for faster and lower cost processing, and chips with DRAM memory have become vital to U.S. technology industries as a result. CSET’s report identifies that U.S. DRAM chip-reliance is almost entirely placed on South Korea, which maintains roughly half the world’s production capacity for DRAM chips. Further, China and Taiwan together account for nearly the remaining half of global manufacturing (43 percent output).
America’s lack of global manufacturing competitiveness in this technology is not just a matter of comparative advantage, but is rather evidence of a risky overdependence that has come to shock U.S. supply chains. Given the high economies of scale that DRAM fabs enjoy, CSET finds the U.S. reshoring of one DRAM fab could amount roughly 6 percent of current global DRAM capacity. The minimum cost-effective DRAM footprint for such a fab would require 100,000 wafers per month in capacity. CHIPS incentives required to attract U.S. construction of a new and viable DRAM fab would require $5 to $10 billion in total. This investment would help advance U.S. competitiveness in a leading market of the semiconductor industry and support the country’s most sensitive DRAM demands throughout any further shortages.
