How real is America’s chipmaking renaissance?

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The CHIPS Act—a $50bn package of subsidies, tax credits and other sweeteners to bring advanced chip manufacturing back to America—appears to be having an impact. But triumphalism may be premature

, to warfighting—that worries policymakers in Washington. Their answer was theAct, a $50bn package of subsidies, tax credits and other sweeteners to bring advanced chip manufacturing back to America, which President Joe Biden signed into law on August 9th 2022.

Any triumphalism may, however, be premature. Leading-edge fabs being built in America are slower to erect, costlier to run and smaller than those in Asia. Complicating matters further, the chipmakers’ American investment binge comes at a time when demand for their wares appears to be cooling, at least in the short term. That could have consequences for the industry’s long-term profitability.

The planned American projects’ smallish size further undermines the economics. The more chips a fab makes, the lower the unit cost. In Arizona,plans to make 50,000 wafers a month—equivalent to two “mega-fabs”, as the company calls them. Back home in Taiwan,TSMCC.C. Wei, the current chief executive ofTSMC

 

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