Strategic Problem

At the heart of the problem is the economic reality that most advanced semiconductor technologies can only be produced with highly specialized and advanced tools designed for high-volume manufacturing.  The cost of those tool sets has made it very difficult for semiconductor suppliers to compete without outsourcing to mega fabrication facilities and foundries offshore.  Those tools, while still available at key U.S. companies – notably IBM – are increasingly found only in high-volume advanced semiconductor mega-fabs either located overseas or owned by foreign governments.  Even the most advanced fab, GlobalFoundries in upstate New York, is 86% owned by the Abu Dhabi government’s Advanced Technology Investment Company (ATIC).

The exodus began 20 years ago and accelerated during the recent recession, when Chinese companies acquired tools from U.S. fabs for a fraction of their original price. The fire sale effectively transferred our core technology capability overseas, where foreign governments heavily subsidize semiconductor suppliers.  These governments recognize that microelectronics manufacturing forms the cornerstone for future technology leadership.

Next: Mega-Fab Economics >>>