Where the U.S.’s Chip Strategy Is Still Falling Short.

The article examines the ongoing challenges in the United States’ semiconductor strategy, focusing on the persistent reliance on Asia for back-end processes such as wafer testing, singulation, and chip packaging. Despite significant investments and subsidies under the CHIPS & Science Act of 2022 to build advanced fabrication plants domestically, labor-intensive back-end manufacturing remains concentrated in countries like China, Taiwan, Malaysia, and Vietnam due to lower costs, established supply clusters, and workforce availability. The authors propose three key measures to address this gap: encouraging chip buyers to factor disruption risks into sourcing decisions, implementing regional trade rules similar to the United States-Mexico-Canada Agreement (USMCA) to incentivize North American production, and offering government demand-side incentives to promote domestic purchasing of finished chips. Without these steps, the U.S. risks having advanced fabrication capacity without the complementary back-end ecosystem needed to produce finished semiconductor products. [Extracted from the article]