Silicon Shield: Dodging China's Tariffs

U.S. chipmakers, including industry giants like Nvidia, Qualcomm, and Apple, are increasingly relying on overseas manufacturing, particularly in Taiwan and South Korea, despite government efforts to reshore chip production through the CHIPS Act. This outsourcing strategy is driven by the immense cost and complexity of building and operating cutting-edge fabrication facilities (fabs), which can cost tens of billions of dollars per facility.

Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics currently dominate advanced chip manufacturing, possessing the technological expertise and economies of scale that U.S. companies struggle to replicate. The CHIPS Act provides significant subsidies, but it doesn't entirely close the cost gap and the complexities involved in developing and maintaining advanced manufacturing capabilities.

Furthermore, the focus of the CHIPS Act is on domestic manufacturing, but chip design remains a core strength of U.S. companies. By outsourcing manufacturing, these companies can concentrate on their core competencies like chip architecture, design, and software, where they maintain a competitive edge.

While the U.S. aims to reduce reliance on foreign chip production for national security reasons, the immediate future remains intertwined with overseas foundries due to their technological lead and cost-effectiveness. The article suggests that U.S. companies are using the CHIPS Act to bolster domestic capacity where they can, but continue relying on overseas fabs for the most cutting-edge processes. This ultimately represents a strategic division of labor between design and manufacturing to maintain competitiveness in the global chip market.

find the original article here: https://tech.yahoo.com/articles/us-chipmakers-outsourcing-manufacturing-escape-101739894.html