By Ted Carter
Recently, there has been important media coverage on an economic and foreign policy issue – providing context for the resurging conflict with China and resulting chess moves vis-à-vis Taiwan; all dealing with the 21st century version of “Black Gold” which are semiconductors.
The Strategic Importance of Semiconductors
How semiconductors are manufactured, their criticality to the Global Economy, U.S. national security, global geopolitics and Global consumer demand, have been highlighted in a recent 60 Minutes segment; Chris Miller’s excellent book, Chip War, The Fight for the World’s Most Critical Technology and a recent WIRED magazine podcast, I saw the Face of God in a Chip Factory: Inside TSMC, the mysterious Taiwanese company at the center of the global Semiconductor industry.
Each raises the alarm for Americans to pay attention to this the emerging geopolitical and economic dance. In this article I explore a more proximate interest – the implications and impacts of these dynamics on community and businesses, which reflects my life’s work as an economic development professional.
The Impact of Semiconductors
Economic Development professionals look for ways to bring new commerce to a region, reduce poverty and create jobs across the wage spectrum for their communities. In my view, semiconductors, present a unique opportunity for exploiting the legislation in the Federal CHIPS & Science Act passed last year – arguably one on the most important pieces of non-Covid related economic legislation passed in the last 20 years and an example of Congress’ application of Industrial policy.
A Value Way Beyond The Sum of Its Parts
Semiconductors serve as the backbone of the modern economy powering everything from iPhones to computers, robotics, and advanced military equipment vital to our national defense and security.
Very little that involves electronics and communication will work without their presence. Thus, whoever controls this vital resource will control the global economy and this further underscores the stakes of the US-China competition in their joint interests in Taiwan.
Taiwan: A Possible Showdown or American Opportunity?
The Taiwan Manufacturing Semiconductor Company (TSMC), which when measured by revenue is the largest semiconductor company in the world and considered one of the world’s 10 most valuable companies. According to some estimates, the company manufactures over 90 percent of the world’s advanced chips and a third of the world’s silicon chips.
These tiny chips are very important to our economic future. So much so, that the trade group for the semiconductor industry, The Semiconductor Association, shows more than 20 planned new semiconductor facilities across the U.S. in thirteen states, equating to hundreds of millions of dollars in new capital investment and thousands of high wage jobs.
New Patterns Will Emerge
While many of the plants appear to be planned for rural areas, my belief is that is due in part due to the availability of land and the greenfield nature of the Capital expense. Securing one of the plants proximate to an urban center could be transformational for decades hence. An example is the planned facility by Intel in Franklin, Ohio that will employ 3000 U.S. workers. The construction of these facilities provides an evergreen source of new quality jobs, strengthening communities and education systems that help to establish a new middle class, much the way steel and auto manufacturing did in the mid-20th century.
Developing a trained and diverse domestic workforce pipeline for these new-economy jobs will create meaningful pathways. For BIPOC communities that receive the requisite training, these jobs can ensure the stability of this specific manufacturing space for decades.
About Ted Carter
Ted is the Founder/CEO of The SI3 Group, a consulting company focused on creating value at the intersection of government, community, and business.