Biden kicks off his ‘Investing in America’ Tour in NC
President Biden kicked off his three week ‘Investing in America’ tour on March 28th in Durham, North Carolina. The next three weeks Biden and members of his administration will visit multiple chip manufacturing sites in over 20 states. This comes after the president signed the CHIPS and Science Act into law this past August.
What is the CHIPS Act?
The act aims to strengthen American manufacturing, supply chains, and national security while investing in research and development, science, technology, and the workforce. It will provide $52 billion to encourage domestic production of semiconductors. Following the passing of the act, companies have announced over $200 billion in additional investments for semiconductor manufacturing in the US.
The first company to receive a visit from the President was Wolfspeed, a semiconductor manufacturer that produces chips to power electric cars, fast-charging stations, renewable energy storage, and aerospace/defense equipment. Wolfspeed is unique in that it produces semiconductors made from silicon carbide.
Typically, chips are made from silicon, but silicon carbide has been proven to be more efficient. An example of this increased efficiency is the extended range these types of chips can provide to electric vehicles as well as decreased charging time. The chips can also be used for 6G and by the renewable energy field for more efficient power generation and storage. Due to these advantages silicon carbide chips are in high demand.
What Does this Demand Mean for Wolfspeed
In 2022, the company opened a new fabrication facility in New York and plans to invest another $5 billion to build a materials plant in North Carolina that will bring 1,800 jobs to Chatham County. As the demand for silicon carbide has increased, so has the company’s net revenue. From 2021 to 2022 the company saw a 39% increase in net revenue. In recent years, Wolfspeed has signed supply agreements with GM, Mercedes-Benz, and Jaguar Land Rover for their electric vehicles.
Research from the Yole Group reports Wolfspeed accounted for nearly 60% of the global silicon carbide wafer market in 2019. The company claims this number is nearly identical today. Typically, Asia dominates the electric vehicle supply chain, but this staggering number proves America has the edge in chips manufactured from silicon carbide.
Has Wolfspeed received funding from the CHIPS Act?
Although Biden visited the facility just yesterday, the company has yet to apply for CHIPS Act funding. “We can say that Wolfspeed is eager to collaborate with its partners in the federal government to help secure our supply chains, boost economic activity, and support national security. We welcome the opportunity to work with the Biden administration to help produce and supply silicon carbide technology right here in the United States, supporting American jobs and innovation.” said company spokesperson Brianna Reede.
The company anticipates applying for federal funding this fall in a joint effort with North Carolina A&T. While Biden was visiting on March 28th, the company announced they have partnered with North Carolina Agricultural and Technical State University to construct a research and development facility focused on silicon carbide to advance the next generation of semiconductors.
Prior to this partnership, Wolfspeed donated $4 million to A&T and in September of 2022 announced a partnership with the University to develop a training curriculum and comprehensive education program which will expand credentials for undergraduates and graduates in silicon carbide semiconductor manufacturing. They will also implement programs for existing semiconductor manufacturing workers to advance their knowledge.
In addition to the company’s support of A&T, Wolfspeed continues to work with North Carolina’s community college system to develop manufacturing skills to meet their growing needs.
Are there Downfalls to the CHIPS Act?
While the CHIPS Act is a huge step forward to encourage domestic production of semiconductors, some are skeptical the act alone is powerful enough to do so.
Bloomberg published an opinion piece on the Act claiming it has three major downfalls:
- Red Tape: Producing chips in the US takes 25% longer and costs 50% more than producing them in Asia. The time to construct a new chip plant in the US has increased by 38% from 1990-2020. Clean Air Act permits can take 18 months to receive, and Environmental Policy Act reviews take an average of 4.5 years. Many other federal, state, and local laws come into play that delay the construction phase adding additional expenses and discouraging private investment.
2. Workforce: The US lacks an educated workforce to fill roles at new facilities. More than 300,000 skilled laborers are needed for current projects underway. The number of Americans receiving advanced degrees related to the field have remained stagnant the past 30 years, while plenty of international students enroll in the programs at US schools. Once these international students graduate, current policy makes it difficult for them to work in the US. Plants are already struggling to find qualified workers.
3. Politics: Companies applying for CHIPS Act funding must follow government rules and suggestions which is difficult for a sector that is not currently competitive.
While there are some concerns, the act has already attracted major investments in the United States. Wolfspeed is the leading producer of silicon carbide semiconductors and is supporting engineering education and semiconductor specific skills in North Carolina. This will enable them to employ skilled graduates and help bridge the skills gap.
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