Micron Technologies CEO Sanjay Mehrotra described semiconductors as a “backbone” of the economy during an appearance on CNBC’s “Mad Money.” Mehrotra’s comments were made in response to President Joe Biden’s proposed $2 trillion infrastructure package, which includes a $50 billion impetus for semiconductor research and manufacturing. Boise, Idaho-based Micron is one of the top five chipmakers in the U.S.
“This is clearly important because the semiconductors form the backbone of everything today in the economies,” Mehrotra said. “We are really a leader in memory and storage, the only U.S. company. We are definitely excited about the prospects of driving greater leadership in research, technology and products through the U.S., as well as on a worldwide basis.”
By definition, semiconductors are any of a class of crystalline solids intermediate in electrical conductivity between a conductor and an insulator, employed in the manufacture of multiple electronic devices, such as smartphones, appliances and computers. To put Mehrotra’s statement into perspective, semiconductor chips are an inextricable part of virtually every finished electrical, or mechanical product that we use in our day-to-day life.
U.S. faces a chip shortage as manufacturers struggle
Semiconductor manufacturing requires a highly evolved manufacturing sphere and technological prowess—currently only a few places in the world possess the capability. The U.S., Taiwan, South Korea, Japan and the Netherlands dominate semiconductor production. The U.S. is a major producer, with companies like Intel, Nvidia, Texas Instruments and Micron leading the charge.
But according to the Semiconductor Industry Association, in spite of its position as the world leader in research and development and capital expenditure, the U.S.’ year-over-year worldwide market share for 2019 was negative for the industry. Manufacturers are also reeling from the impact of COVID-19, which has upended supply chains and put the market in a state of flux. Additionally, while the U.S. remains the global leader in semiconductor design and R&D, most of the chip manufacturing is now performed in Asia, according to a recent report from semiconductors.org.
How the proposed $50B package could help U.S. chipmakers like Micron
“This is about out-competing China, if we act now … we will compete with China,” said U.S. Commerce Secretary Gina Raimondo. “There is time to do that, to rebuild, to build in semiconductors in particular, but we have to get to the business of doing it.”
Raimondo’s comments and the potential aid package come amid an acute global shortage of chips and semiconductors that have hit many industries, especially automobile and electronics manufacturing. As demand grows for products that depend on semiconductors in the U.S. market, there is only one way to overcome the shortfall: boosting production. The proposed $50 billion plan would go toward production incentives and research and design, including the creation of a National Semiconductor Technology Center, according to administration officials.
