The Semiconductor Injuries of the United states

The history of US politics, especially in the past 30 years, has been marked by what some might call an illogical consistency.

From Afghanistan and Iraq to spending billions of dollars on aid to countries that many would argue don't reciprocally benefit the US in the same way, the focus of the United States is being shattered amongst many topics, and many of them are not relevant to the main challenge that faces the US this decade and certainly this century, namely countering another upcoming superpower: China.

The United States budget in 2022 was 6.2 trillion dollars, with approximately 767 dedicated to defense. Yet many of the long-term industries that feed the defense production machine have not been invested in adequately to make sure the United States remains competitive long-term when it comes to combat modernization, especially with regards to the fields of AI, space, drones, and semiconductor physics.

The United States lacks the capability to produce 7 and 5 nm chips and depends on East Asia for their production, namely Taiwan and South Korea. Taiwan, China, and Singapore have been responsible for most of the assembly, testing, and packaging, with the US doing less than 5 percent of these tasks.


Venture capital money in semiconductors:

Entrepreneurialism in the field of semiconductors in America has seen a major setback in recent decades, as most of the work is done in China, and the number of startups and IPOs is also there. In the US, the number of firms that raised capital was 17, while there were 58 in China, accounting for a total of 1277 million USD versus 710 million USD in the US.

As far as the fabrication plants, China is far outspending the US and is building more plants. Chinese spending was 29.2 billion in 2021, while all of North America was at 7.61 billion.

China offers huge incentives and tax credits for companies that invest in semiconductors and their respective R&D, being the country that holds the largest share of the semiconductor market.

In 2022, China already had chip subsidies worth at least $150 billion and was paying huge bonuses for engineers and technicians specialized in the field to transfer talent and technology to its industry as fast as possible.

Lack of funding and sound strategy are not the only two things the US is lacking when it comes to semiconductor manufacturing. Lack of talent is one of the biggest challenges the US has to overcome if it were to compete with China, as there is an extreme shortage in the semiconductor industry.

The US shortage could be as large as 300,000 by 2025. This is a derivative of the huge problem that the US has in stem education, while China has an abundance of stem graduates and offers lucrative incentives for people to innovate in the Chinese Market.

In the school year 2020–21, 437,302 STEM bachelor's degrees were awarded in the United States. Additionally, 146,573 Master's degrees in STEM fields were awarded in that year, but over two-thirds of these students in PhD programs are foreign nationals, and many of them don't get to stay in the US after studying with the stiff immigration posture. China, on the other hand, graduates over 5 million stem students every year and aggressively pursues skilled labor in the field, luring the migrants to China with great incentives and rewarding accommodations.

It will not be until the US can tackle the dimensions of money, technology, time, energy, and talent production that it can catch up and close the gap in the semiconductor realm thus protecting it's future ability to Hold a superior position in Economics and defense.