Taiwanese firm GlobalWafers is one of the world’s leading producers of electronic wafers, a thin slice of a semiconductor that is used to make integrated circuits and other micro devices. [Image: CristianIS / Pixabay]

Show Me the Chips: Semiconductor Linkages Between Taiwan and Missouri

Taiwan Asia

Semiconductors are foundational to the modern global economy. Instrumental in computer processors, microchips, telecommunications networks, household appliances, and other products and industries, the parts are a key driver of innovation and productivity and are critical to national security. The United States has long been a leader in the semiconductor industry, and made up 28% of the global market in 2001. Over the past decade however, that market share has declined to a historic low of 21% in 2016. Cognizant of this trend, industry and political leaders have been making efforts to restore US technological leadership in this key sector.

Among these efforts is the $800 million agreement between Taiwanese company GlobalWafers (GWC), one of the world’s top manufactures of wafers, and US firm GlobalFoundries, the global leader in feature-rich semiconductor manufacturing, to expand the production of wafers, a key input for semiconductors, at GWC’s manufacturing facility in O’Fallon, Missouri. In doing so, the United States will not only decrease its dependence on foreign sources for semiconductor materials, but also enhance its economic relationship with Taiwan, another industry power player.

For residents of O’Fallon, the agreement is a monumental opportunity for the local economy. Capital investments for a new facility and production expansion total $210 million, and it is estimated that over 75 jobs will be created in the St. Louis suburb. A completion date for the project is currently set for the fourth quarter of 2021.

The role of states like Missouri in cooperating with foreign partners like Taiwan’s GWC will only continue to grow in importance as policymakers work to reinvigorate US industry leadership. Reports reveal the truly complex nature of the semiconductor production process, with over 25 countries directly involved in R&D, design, and manufacturing and 23 more involved in supporting roles. Enhancing the linkages between countries in the global supply chain will be crucial in preventing future shortages.

“I think it will become more and more important to have regional access to semiconductors and chips. It’s just how the pendulum swings. We may start seeing a shift back towards having less dependence on one country or one region.” said Mark England, President, of Globalwafers Co.,Ltd. - Press Conference, June 10th, 2021

The political and security significance of having a resilient semiconductor industry has not been lost amongst state and local government officials. In addition to the initial investment, the state of Missouri, as well as numerous localities including O’Fallon, have put forth $9.4 million in funding to strengthen the existing agreement. The partnership has also been praised by numerous political leaders as an important first step in executing a more strategic industrial policy for semiconductors.

“Semiconductors are critical to our national security and economic competitiveness. The supply chain of these computer chips is highly complex and largely dominated by other countries. We need to begin making more chips at home to protect U.S. industries from chip shortages like we have seen in recent months. Today’s announcement is good news for semiconductor manufacturing and will create steady, good-paying, high-tech jobs for Missourians.” - commented U.S. Senator Roy Blunt, (MO)

As far as national leadership is concerned, the investments in O’Fallon reflect the importance of policy action by Congress. The Creating Helpful Incentives to Produce Semiconductors for America (CHIPS) Act, and the American Foundries Act in 2020 both enjoyed broad legislative support and were consolidated into the FY2021 National Defense Authorization Act (NDAA). The bills are currently in the appropriations phase for the FY 2022 NDAA.

Clayton Russo is a participant in the Young Professionals Program at the East-West Center in Washington. He is a graduate student at the Missouri State University Department of Defense and Strategic Studies, with a concentration in Asia and Countering WMD.