In 2021, supply chain problems brought on by the global coronavirus epidemic cost the auto industry billions of dollars, and several businesses decided to develop local production plants to address the issue.
Elon Musk, the CEO of Tesla, wrote on the now-named X platform, “Never seen anything like it.” Every company is placing excessive orders out of fear of running out of computer chips, on a much larger scale than the current toilet paper crisis.
Tesla relies on Taiwan Semiconductor to manufacture its processors, but it’s not the only American business that uses foreign factories to build its components. According to CLSA investment analyst Sebastian Hou, tech companies like Apple Inc., Amazon.com Inc., and Google purchase 90% of their chips from Taiwanese contract manufacturers.
On CNBC’s “Street Signs Asia,” he stated, “It’s going to be a challenging and long journey for them to diversify away and thinking about how long it takes for the chip development and cooperation — it’s going to take a while.”
In 1990, the United States held a 37% global market share in the semiconductor sector; by 2022, that percentage had dropped to 10%. A study by Savills Research & Data Services found that supply chain challenges during the epidemic underscored the need for domestic semiconductor production for the sake of national security.
Recognising this need, Congress passed the CHIPS and Science Act in 2022, which will provide financing to advance semiconductor manufacturing and research in the United States.
In the United States, the chip industry occupies around 94.9 million square feet of commercial real estate, supporting activities including design and production as well as research and development (R&D). The Savills analysis estimates that an extra 200 million square feet of space will be required if the United States intends to raise its production market share from 10% to 20% globally.