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ACF Blog- Re shoring
If we believe that counterfeits only come from certain countries and that we must do something to combat the threat of economic wars, then this action makes great sense. We may address the biggest threat but it would be foolish to think that resolves the problem.
However, if we look at the original reasons for the offshoring, we find that nothing has really changed and the reshoring is expected to bring higher labour and overhead costs from manufacturing in either Europe or the USA
My conclusion is that it may be the answer but it will be several decades until we can judge the results.
At heart I am a patriotic person and would be happy to see these initiatives succeed . There is a lot to do and many challenges to overcome. In the meantime we need to look at the methods to combat counterfeit now, which we can also learn from so we can eventually transition to onshoring once we’ve made it economically viable.
Perhaps, our confidence is in increased automation levelling the playing field to use that old expression. It is also naïve to think that our colleagues overseas have not learnt a great deal from more than forty years of experience building products to order. Since the 1970’s the vast majority of assembly and test for semiconductors has been in various parts of Asia.
In my opinion the sums of money mentioned in the well intentioned US and European chip acts fail to recognize the size of the global semiconductor market and the decades of entrenched behaviour.
The CHIPS and Science Act is a U.S. federal statute enacted by the 117th United States Congress and signed into law by President Joe Biden on August 9, 2022. The act provides roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States.
To learn more about this take a look at this website.
The similar European Act is well described in the factsheet available here.
European Chips Act: Factsheet | Shaping Europe’s digital future (europa.eu)
For context look at the investments by Intel, Samsung, STM and others as single companies with respect to both acts above. Also consider the competing investment in the outsourced foundries such as TSMC, & Global Foundries which currently dominate the semiconductor fabrication part of the semiconductor cost base.
Equally governments and industry need to recognize their important role in encouraging the offshoring practices whilst attempting to protect IP back in home countries.
An example of this is the recent pact where semiconductor lithography suppliers in Europe and the USA are now stopping the shipment of the latest technology to combat the Chinese ambitions for semiconductor independence.
The material scientists among us will also ask where the raw materials are coming from – are we still in a weak negotiating position for semiconductor raw materials?
We also need to look at the complimentary product assembly and test being overseas as this inevitably educates those we choose not to support at the component level and system level.