By Michael Randle
Out of nowhere, just about every industry in the U.S. faced a chip shortage crisis in recent years, particularly the last five years. We should have known.
Beginning in the early 1990s, many U.S. and foreign-based companies outsourced semiconductor production to China, Taiwan, South Korea and Malaysia. The Japanese were already big chip producers, but back then, it was all about costs and the U.S. and Japan could not compete with China.
That was the case until Asian wages, including those in China and Malaysia, went through the roof. Because of that, in about 2009 the word “reshoring” was invented. The idea was this: U.S. wages had stagnated for years, but that was a good thing to major manufacturers. All of a sudden, a manufacturer could produce goods – in the South, anyway – for about the same costs as in China, factoring in rising wages, shipping costs and others issues surrounding making something halfway around the world for U.S. consumption.
In the mid-2000s, after manufacturers of every sector known, left the U.S. in a herd mentality to Asia and Mexico, major corporations were all for free trade. They could make stuff and pay $2-an-hour. It might not have been well-made stuff, but it was made and it was bought to be assembled right here in the USA.
It was about then that corporate minds began to wonder. Why are we producing things over there when we can make them here for about the same costs? At the center of the issue was the semiconductor industry and literally giving China a free pass on intellectual knowledge developed here in the U.S. Computer chips made in China, some as old as 10 years, were being used by American industry and amazingly, still are. Something had to change and it did.
Several multi-billion dollar projects have been announced in Texas and North Carolina in the last year are undeniably being made to counter the Asian issue and the availability of chips for every industry that uses them. Yet, when the automotive industry noticed the problem with a shortage crisis, which seemed to tip the scale.
Two big deals announced in Texas last fall will eventually come to the economy’s rescue. Texas Instruments announced it plans to invest up to $30 billion to build as many as four new semiconductor fabrication plants in Sherman, Texas. TI said it will begin construction in 2022 on the first two plants producing its 300-millimeter wafers used in everything from cars and trucks to industrial machinery. The plants could house up to 3,000 workers when complete. The other big semiconductor facility is by South Korea chip manufacturer Samsung Electronics. It will build a second chip facility in the Austin area in Taylor, Texas. The plants will house thousands of workers.
Micron Technology is the latest high-tech giant to consider the Austin area for a multibillion-dollar manufacturing operation. According to the Austin American Statesman, the company was checking out sites near Lockhart, Texas, according to its applications for tax breaks filed with the state comptroller’s office. The investment would total at least $20 billion, but much higher from 2030 to 2040. However, Idaho-based Micron chose a site near Syracuse, N.Y. for its latest venture.
On a much bigger scale, South Korea-based Samsung, which already operates a computer chip plant in Austin and currently building another nearby in Taylor, Texas, is considering 11 new fabrication plants in Central Texas. The projects could top out at $200 billion. The potential plans are described in 11 applications Samsung has filed with the Taylor and Manor school districts seeking tax breaks for building the facilities.
North Carolina has also gotten in to the semiconductor reshoring “herd mentality” act. North Carolina-based Wolfspeed is building a $5 billion semiconductor manufacturing plant, it was announced in September. The company is a world leader in silicon carbide semiconductor manufacturing. The $5 billion being invested is the largest capital investment for an economic development project in North Carolina’s history. The project, located on a site in Siler City, N.C., near the Research Triangle, will create 1,800 new jobs.
Back in the 1990s, every state in the South clamored for semiconductor plants that represent billions in investment and house thousands of good-paying jobs. Since few media properties had websites back then, many of Southern Business & Development’s ads purchased in the print product were about how well-suited this place or that place was for semiconductor manufacturing. I think during that, the South may have landed three chip facilities.
But, by then, it was too late. We had already started the massive offshore massacre that devastated the middle-class in this country. It was the “giant sucking sound,” that Ross Perot phrased during his 1992 US presidential campaign; referring to the sound of U.S. jobs heading south for Mexico should the free-trade agreement go into effect. Mexico got our share of jobs, but China got the lion’s share.
Maybe now, too late has become very early in the reshoring of manufacturing to the U.S. It is just a matter of laws set forth by our lawmakers and how competitive we remain.