Don’t count out the U.S. from again becoming a chipmaking powerhouse, reported the Hinrich Foundation Tuesday. Despite higher costs and lack of “large-scale local manufacturing ecosystems,” semiconductor production looks set to return to the U.S., it said. “This is a testament to the primacy of geopolitics over markets and the role of techno-nationalism in shaping the future.” Reshoring chip manufacturing to the U.S. won’t be easy due to the lack of a domestic manufacturing base and “the dearth of highly skilled labor required for complex chip manufacturing,” it said. But recent developments, including Intel’s $20 billion investment to expand operations in Chandler, Arizona, with two new foundries (see 2103240011), signal the U.S. “can arrest the free-fall of its chip manufacturing ability despite there still being a lot of ground to recover.”

The Senate got the necessary "yes" votes to pass the U.S. Innovation and Competition Act Tuesday, as expected (see 2106080008). The vote was 68-32. S-1260, previously known as the Endless Frontier Act, includes $52 billion for U.S. chipmaking and $1.5 billion to implement the Utilizing Strategic Allied Telecom Act. The semiconductor money includes $49.5 billion to implement the Creating Helpful Incentives to Produce Semiconductors for America Act. Senate passage of S-1260 "is a pivotal step toward strengthening U.S. semiconductor production and innovation and an indication of the strong, bipartisan support in Washington for ensuring sustained American leadership in science and technology,” said Semiconductor Industry Association President John Neuffer Tuesday. The "content on China" in S-1260 "distorts facts" and "denigrates China's development path," said a Chinese Foreign Affairs Ministry spokesperson Wednesday. "How the U.S. intends to develop and strengthen its competitiveness is its own business, but we are firmly against the U.S. making an issue out of China and perceiving it as an imaginary enemy." Prospects for House passage of S-1260 remain unclear when it returns from recess Monday. The Science Committee plans to vote Tuesday on the rival National Science Foundation for the Future Act (HR-2225), a House aide said. Committee Chairwoman Eddie Bernice Johnson, D-Texas, raised objections about S-1260’s proposal to create a Technology Directorate within NSF.

Global semiconductor sales reached $41.8 billion in April, increasing 1.9% from March and 21.7% from April 2020, reported the Semiconductor Industry Association Wednesday. “Global demand for semiconductors remained high in April, as reflected by rising sales across a range of chip products and throughout each of the world’s major regional markets,” said SIA President John Neuffer. “The global chip market is projected to grow substantially in 2021 and 2022 as semiconductors become increasingly integral to the game-changing technologies of today and the future.” Year-over-year sales increased 25.7% in China, 24.3% in Asia Pacific, 20.1% in Europe, 17.6% in Japan and 14.3% in the Americas, said SIA.

Most Marvell Technology semiconductor products “are proprietary and sole-sourced, and demand for our solutions continues to grow,” said CEO Matt Murphy on an earnings call Monday for fiscal Q1 ended May 1. “We need to support our customers with a flexible supply chain capable of delivering to upside demand within a reasonable lead time, something that has not been feasible this year.” Marvell is confident “we have secured sufficient supply to enable accelerating year-on-year revenue growth” for its second fiscal half ending early February, said Murphy. “We expect supply to further improve next fiscal year.” Marvell expects a “strong second-half ramp” compared with the first half in its networking business from the “increase in 5G adoption in the U.S. and other regions,” he said.

China will be capable of supplying at least 30% of its domestic semiconductor needs within 30 months through an organized industrial program of “self-reliance,” reported Strategy Analytics Monday. “This level of self reliance is considered the minimum needed to buffer against import supply disruptions,” said analyst Christopher Taylor. The trade war with the U.S. and global chip shortages are fueling China’s drive toward such “self-sufficiency” through targeted investments and incentives, especially in “higher-demand mature process nodes,” said SA.

HP has seen an “evolution” in recent months in the types of component shortages that are hampering the vendor from fulfilling all its notebook PC demand, CEO Enrique Lores told a Bernstein virtual investor conference Thursday. “Two quarters ago, we were talking mostly about processors” in short supply, plus LCD display panels for laptops, he said. “The situation on processors has significantly improved and now we see the biggest shortages in panels, not driven by the glass, but driven by the components that panels use.” Shortages also persist “in what we call low-cost components,” he said. Those can include Wi-Fi controllers, card adds, bus controllers -- “almost any other component that is necessary to build a PC,” he said. “This is where we expect to see the highest pressures on cost.” HP expects it will be passing along the inflationary costs in the “medium term,” said Lores. But in the short term, “some contracts we can reprice, some other contracts we cannot,” he said.

Chip demand is “much more pervasive than we've ever seen” and “we're really in the early innings of this huge demand acceleration,” Applied Materials CEO Gary Dickerson told a Bernstein virtual conference Wednesday. The company supplies semiconductor production equipment to chipmakers and OLED vapor-deposition products and services to Chinese panel makers, Customers are talking about “big multiyear investments” in “longer-term supply assurance” contracts, more “than I've ever heard before,” he said. “I really see a rethinking of the whole supply chain, and people are understanding that you can't respond in a matter of weeks or months relative to building capacity.” People in the supply chain “are understanding this just-in-time type of a mindset is not going to work,” he said.

With all the “concurrent trends” driving unprecedented demand for semiconductors in the consumer, automotive and industrial sectors, all chipmakers are “chasing supply, and my sense is we’ll be chasing supply in the industry for at least another year,” Analog Devices CEO Vincent Roche told a Bernstein investor conference virtually Wednesday. “The choke point today is largely in the silicon fabrication side of things,” he said. Most of the current industry constraints reside in “external third-party silicon fulfillment,” said Roche. “Our back end -- we got ahead of the cycle and we’ve been putting a lot of capacity into our test facilities to make sure that outgoing tests are well covered, and we still have some redundancy built in there.” No semiconductor customers are “building inventory right now,” said Roche. “My sense is what we’re seeing right now is real demand,” not customers doubling up on orders from multiple suppliers, he said. “We use sell-through” at the point of sale rather than sell-in as the “planning signal” for capacity strategies, he said. “We pay very close attention to what the POS signals are telling us by sector. If we do see anything out of kilter, we’ll balance it and make sure we’ve got supply in the places where the POS signals tell us the supply should be.”

Hewlett Packard Enterprise is navigating the “industry-wide tightening and cost inflationary trends” as best it can by taking “proactive inventory buffering measures to position us well for the second half,” said CEO Antonio Neri on a call Tuesday for fiscal Q2 ended April 30. “We will continue to take additional inventory actions as appropriate in alignment to the market demand” by leveraging “long-term agreements with our suppliers,” he said. HPE sees “further industry-wide tightening and inflation persisting in the near term,” said Chief Financial Officer Tarek Robbiati.

Incoming CEO Cristiano Amon rejects the notion Qualcomm is “more acutely impacted” by the chip shortage than others in the space, he told JPMorgan’s virtual conference Wednesday. Spiking demand from many end-market sectors is so pervasive that few, if any, chipmakers are able to keep up, he said: “In the current environment, if you're a semiconductor company and you don't have more demand than supply, you should be worried.” Qualcomm is navigating the crisis through “capacity-planning actions with our foundries, and we expect to see material improvements towards the end of the year,” he said. The company is a firm believer that 5G will require millimeter wave to reach its “full potential,” said Amon. Every global 5G market “eventually” will have mmWave, he said. “It's just a question of time.”