Why Washington Must Invest in Domestic Compound Semiconductor Production

7 Pages Posted: 16 Oct 2023

See all articles by Eric Miller

Eric Miller

Woodrow Wilson International Center for Scholars

Date Written: September 16, 2023

Abstract

The landmark CHIPS and Science Act, which was passed by Congress in August 2022, spurred almost $170 billion in new semiconductor manufacturing investment announcements in its first year. Despite this substantial success, not all semiconductor types are benefiting as they should. Single element chips, mainly silicon, have seen significant manufacturing capacity growth. Compound semiconductors, which are composed of more than one element and power the most advanced technologies, have not seen much benefit at all from the CHIPS Act. The paper argues that this needs to change.

Far from being a “future” technology, compound chips, such as those made with indium phosphide (InP), are already widely in use in America's telecommunications systems. Applications in aerospace and healthcare are also growing. While America invests little in compound semiconductors, competitors such as China and India are investing heavily. To ensure its long-term economic and national security, the United States needs to be strong in all major types of semiconductors, including those of the compound variety.

Fortunately, at the time of writing, some members of Congress and others in the policy community are beginning to take notice. The paper concludes by arguing that certain share of CHIPS Act funding, say 20%, should be earmarked to support the development of compound semiconductor manufacturing and advanced testing and packaging capacity. In addition, Congress should undertake a detailed study on the role of compound semiconductors in future defense and dual-use applications.

Keywords: Semiconductors, CHIPS Act, technology, defense, United States, China, telecommunications, innovation

JEL Classification: H20, L52, N72, O31, O33, O38

Suggested Citation

Miller, Eric, Why Washington Must Invest in Domestic Compound Semiconductor Production (September 16, 2023). Available at SSRN: https://ssrn.com/abstract=4573945 or http://dx.doi.org/10.2139/ssrn.4573945

Eric Miller (Contact Author)

Woodrow Wilson International Center for Scholars ( email )

One Woodrow Wilson Plaza
1300 Pennsylvania Ave., NW
Washington, DC 20004
United States
202-320-6074 (Phone)

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