New Semiconductor Plants In US Face Environmental Challenges

Semiconductor manufacturing will have grown into a trillion-dollar industry by 2030 as chips power nearly all parts of our world.

The United States, once the source of almost all semiconductor manufacturing, outsourced most of its factories overseas to reduce costs.

Taiwan was the main beneficiary of this transition and the country now produces roughly 50% of all the world’s semiconductors.

The US, meanwhile, has seen its production capabilities drop from 40% of global production in 1990 to only 12% currently.

China consumes more than 50% of the world’s semiconductors but relies almost entirely on imports, leading the Chinese government to invest heavily in semiconductor manufacturing facilities, or “fabs,” with a goal to produce 70% of its own semiconductors.

This shift led the Biden administration to push for funding for more domestic manufacturing through The CHIPS and Science Act which passed into law last year.

CHIPS provides $39B in government assistance to support semiconductor manufacturing on US soil.

But much of the growth of these US-hosted fabs has been delayed by environmental reviews.

Semiconductor fabs are notoriously toxic to the environment.

In fact, Silicon Valley contains the most Superfund sites of any county in the US from its origins for many of the original semiconductor locations.

While many of the toxic processes have been improved or removed, the struggle that remains is to build facilities under the US’s National Environmental Protection Act, a regulatory law that many of the countries with which the US competes do not have to contend with.

This has led to new legislation proposed by Senator Mark Kelly of Arizona and Senator Sherrod Brown of Ohio that would streamline much of the more onerous reviews of these locations under NEPA.

It remains to be seen if Congress will pass this act and if it will improve the US’s ability to compete globally for what has become a strategic resource.