The EconomistThe Economist

The American chip industry’s $1.5trn meltdown

By The Economist

17 Oct 2022 · 5 min read

With demand for smartphone and PCs on the decline, the chipmakers planning to make chips in the US are now scrambling to find newer customers even as revenue forecasts are dismal.

Curated by informed

In Licking County, Ohio, fleets of dump trucks and bulldozers are shifting earth on the future site of chip factories. Intel is building two “fabs” there at a cost of around $20bn. In March President Joe Biden called this expanse of dirt a “field of dreams” in his state-of-the-union speech. It was “the ground on which America’s future will be built”, he intoned.

In the spring it was easy to be dreamy about America’s chip industry. The pandemic-induced semiconductor crunch had proved just how crucial chips were to modern life. Demand was still rising for all sorts of chip-powered technology, which these days is most of it. Investors were less gloomy on chips than on other tech, which was taking a stockmarket beating. The CHIPS act was making its way through Congress, promising to plough subsidies worth $52bn into the domestic industry, in order to reduce America’s reliance on foreign fabs and support projects like Intel’s Ohio factory.

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