Foxconn, HP, Dell Back US Funding of Semiconductor Infrastructure

Federal funding and public-private partnerships and subsidies are key to building long-term U.S. competitiveness in the semiconductor industry, commented PC market share leaders HP and Dell Technologies, plus contract manufacturer Foxconn, in postings Tuesday in docket BIS-2021-0011. Comments were due Monday in the Commerce Department’s Bureau of Industry and Security inquiry to help shape recommendations to the White House on President Joe Biden’s Feb. 24 executive order to relieve semiconductor supply chain bottlenecks (see 2103110054).

Public and private sector investments in “people and education” are a good “first step” in developing “a ready and trained workforce that can sustain a U.S. semiconductor ecosystem,” said Foxconn in a rare public policy statement. “Decades of outsourcing has taken its toll on a semiconductor ready workforce,” said the self-described world’s largest electronics manufacturer.

Within 100 miles of Foxconn’s Mount Pleasant, Wisconsin, manufacturing site, about 41,000 graduates “from some of America’s most renowned research institutions and technical colleges enter the workforce each year,” it said. “This will serve as a hub to recruit elite talent from various fields, thus sowing the seeds for smart manufacturing and future technologies.” The 3,000-acre site “could potentially be the home” of future semiconductor production under the right conditions, it said.

Foxconn launched plans in summer 2017 to build a preeminent LCD display fab on the site with 13,000 workers, reaching full employment by 2021 (see 1708040056), but the plans never materialized. “To my understanding, based on the latest communication with my contacts in Wisconsin, there is no activity toward display production at the Mount Pleasant site,” said Bob O'Brien, president of Display Supply Chain Consultants, who has tracked Mount Pleasant developments closely since 2017. “While I have never seen a statement from Foxconn that they have given up on plans for displays, the practical evidence suggests that they have,” said O'Brien Wednesday. “I do not expect the Wisconsin site to ever host display production.” Foxconn didn't respond to questions.

Repurposing Mount Pleasant for semiconductors “might make a silk purse out of the sow's ear in Wisconsin,” said O'Brien. The state under then-Gov. Scott Walker (R) promised Foxconn billions in financial incentives for building and operating an LCD fab at full production. Foxconn “wouldn't need much space” in Wisconsin to pursue semiconductor packaging, said O'Brien. Semiconductors involve “manipulating” 12-inch wafers. In a Gen 10.5 LCD display fab optimized for the largest-screen TVs, substrates typically measure up to 10 by 11 feet, he said. "That's why display fabs are so huge."

Foxconn supports federal funding to “reduce the barriers of entry for critical infrastructure that support the semiconductor industry,” it said. “We also recommend federally sponsored science and technology parks” in which a “cluster of semiconductor manufacturers can benefit from shared services and investment,” it said, apparently with Mount Prospect in mind. “If several [manufacturers] share the same wafer treatment and waste disposal system, companies can reduce cost and promote environmental sustainability.”

A “stable and reliable supply” of semiconductors is essential to HP’s two main product lines of PCs and printers, said the vendor in comments that were heavily redacted to hide competitively sensitive sourcing information. “Chip supply constraints are creating challenges across industries,” it said. The PC industry “is having difficulty servicing the demand in education in large part due to chip shortages,” it said. “Our component prices have increased and delays have doubled our lead times.”

Returning “critical supply chains” and semiconductor manufacturing to the U.S. “creates new jobs for hard working Americans, while ensuring our ability to produce critical goods quickly and locally during future crises,” said HP. “Bolstering and protecting the U.S. supply of semiconductors will spur growth in countless downstream industries.” It said the federal government should support increased semiconductor fab capacity in the U.S., boost collaboration with international allies and “trusted partners in semiconductor producing countries/regions,” and examine the challenges to “reshoring” PC assembly in the U.S. to “drive the electronics ecosystem.”

Dell agrees the public's need for semiconductors “will only increase in the future,” it told BIS. “Increased investment in chip manufacturing is therefore going to be necessary to meet the ever-increasing demand highlighted by the current shortage.” Dell cautioned that building a semiconductor fab “is very costly and requires significant government support to be competitive with factories in other locations around the world, particularly where governments are investing heavily in the future of their semiconductor industry.”

The government “should not interfere in market dynamics on behalf of an individual industry, particularly when the price for the rest of the economy is so high,” said Dell. “Having the government pick winners and losers will exacerbate the digital divide at a time when the government should be looking for ways to help those most impacted by the pandemic and economic slowdown, including rural and underserved American schoolchildren.”

In Dell’s view, “the most effective approach is to provide long-term funding to the broader industry focused on increased investment in chip manufacturing that allows the market to determine the types of chips produced based on customer needs,” it said. Public investments in chip manufacturing “generally without dictating how funds should be spent” would significantly increase domestic production, plus enable the U.S. “to be globally competitive,” it said.