U.S. semiconductor manufacturing will triple in a decade (2022 to 2032), according to a report by the Semiconductor Industry Association (SIA) and Boston Consulting Group (BCG).

In August 2022, the U.S. Congress passed the CHIPS and Science Act, which includes substantial funding and tax credits for domestic semiconductor production. 

The funding will help accelerate U.S. semiconductor development, which has lagged for the past decade, and will have enormous geopolitical benefits. 

According to a May 2024 report by SIA-BCG, in the decade following the enactment of the CHIPS Act (2022 to 2032), the United States is projected to triple its semiconductor manufacturing capacity (the highest growth rate in the world during that period). 

U.S. semiconductor manufacturing

The report also forecasts that the United States will increase its share of advanced (sub-10nm) chip manufacturing to 28% of global capacity by 2032.

At the same time, the United States will capture 28 % of total global capital expenditures (capex) between 2024 and 2032. 

By comparison, in the absence of the CHIPS Act, the report estimates that the U.S. would have captured only 9% of global capex by 2032.

The Needham Funds, a series of investment funds managed by Needham Investment Management, said that funding from this law has been slow in coming so far, but added that it expects the pace to pick up in 2024. 

In particular, these funds continue to favor the semiconductor capital equipment industry, including portfolio holdings MKS Instruments (MKSI), FormFactor (FORM) and Veeco Instruments (VECO). The Needham Funds likes semiconductor manufacturers with exposure to AI, automotive, industrial and wireless infrastructure.

Investments

Thanks in part to the CHIPS and Science Act, the U.S. is expected to get a larger share of new private investment in semiconductor manufacturing. 

As of August 2024, companies in the semiconductor ecosystem had announced more than 90 new manufacturing projects in the U.S. Since the introduction of CHIPS in Congress, these projects have generated nearly $450 billion in announced investments. Furthermore, these projects span across 28 states.