The CHIPS Act will open the floodgates of funding to increase domestic integrated circuit production. For panel builders, this creates a huge opportunity to serve production-equipment OEMs and chip-fabrication facility managers.
A few years ago, many business consultants quoted the interesting fact that the Chinese characters for the word “change” were a combination of the characters for “danger” and “opportunity.” The idea of this observation was that business owners and leaders should understand that change can bring both.
It turns out that is not how “change” translates from Chinese, but the point is still a good one. And it is a point that is particularly relevant to panel builders. The big change that occurred was passage last year of the CHIPS and Science Act that provides roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States.
What is the opportunity the act offers, what are the dangers, and how can you navigate the changing landscape ahead?
More American-made chips
The CHIPS Act was enacted after recent global-supply-chain issues made it painfully obvious how dependent the US is on other countries, mainly in Asia, for its semiconductors. Consumers were astonished to learn that it is not just mobile devices and other electronics that depend on these chips.
“Smart” appliances – washers, dryers, refrigerators, and others – were all in short supply for months due to a lack of chips. Car buyers were frustrated when they couldn’t get a new vehicle because manufacturers lacked the required chips. Today’s vehicles require as many as 300 semiconductor chips to function. ASML, the world’s leading supplier to the chip industry, estimates the number of chip-dependent devices is expected to grow from around 40 billion today to 350 billion by 20301. Demand for chips will be huge.
Chipmaking isn’t a new industry in the US. The technology was born here, led by well-known American companies including Fairchild, Hughes Aircraft, Raytheon, and Texas Instruments. Semiconductors rank as the nation’s fifth largest export today, with US companies representing seven of the top 10 global chipmakers by market capitalization. Still, US fabrication represents only 12% of global semiconductor manufacturing capacity and falls far short of our domestic need for chips.
To claw back a larger percentage of that market, the CHIPS Act directs $39 billion specifically to building or modernizing domestic semiconductor manufacturing capabilities.
Chip production is referred to as “fabrication,” and most people refer to chipmaking plants as simply “fabs.” These plants have some unique panel requirements due to the nature of the processes used.
There are approximately 1,000 discrete steps in the chipmaking process. It is an additive process, applying/creating, modifying, and removing layers of materials. Modern chips can have up to 100 layers, which all need to align on top of each other with nanometer precision.2 From Step 1 until a wafer is finished takes up to 14 weeks.
That means a colossal amount of very expensive in-process inventory at various levels of completion. Many of these processes are highly sensitive to power quality and all are dependent on power system availability. An outage, voltage sag/surge, or other issue can mean scrapping batches of chips that are far down the production pipeline. Unlike some products, reworking or salvaging a damaged batch of chips is typically not possible.
In addition to the power needs of the production equipment, there are similar requirements related to facility systems, particularly HVAC which must tightly control air cleanness, quality, and temperature to maintain chip quality.
There are several key factors that deeply interest fab facility managers and fab tool manufacturers, and that panel builders must be aware of:
Power availability: Obviously, these managers and makers will turn to the panel builders best able to ensure outage-free power. Facility managers will also be intensely interested in uninterrupted power to their mechanicals. Panels that enable faultless switching to alternate or backup power sources are vital.
Power quality: A voltage sag or surge can spell doom for a costly batch of chips. There is an undeniable need for panels and devices that incorporate the ability to seamlessly ride through any power deviations to the user’s production equipment.
Sustainability: Many chipmakers include environmental issues in their equipment-sourcing considerations. Large fabs use as much as use as much as 2.4 gigawatt-hours (GWh) per day, more than an automotive plant or oil refinery. This can account for as much as 30% of their operating costs.3 For panel builders, this encourages selection of components that are inherently very efficient and/or enable reductions in power consumption.
Connectivity: Connectivity of production assets provides the ability to better monitor, manage, and maintain processes. But connectivity, and particularly cloud connections, terrify fabs. People in this highly technical industry are particularly attuned to cybersecurity issues. Panel builders need to give equal consideration to both the connectivity capabilities of panel components, and the ability to modify or defeat those capabilities. Whether a fab uses connected power distribution equipment or hosts its data on-premises, today’s intelligent distribution components, such as transfer switches and circuit breakers, can provide vital insights into a fab’s processes. This increased visibility may reduce operating expenses and preemptively warn of trouble, to ensure higher power-system availability.
It may require some special effort to break into the fab market, but there’s an important benefit for panel builders able to do so. All manufacturers strive to maintain consistency in their processes and products, but fabs take that to the next level with a practice known as “copy exactly.” To ensure chip consistency, they try, as closely as possible, to replicate the identical manufacturing processes and conditions in all production locations.
Once a panel builder successfully connects with a fab operator or fab tool OEM on an application, they can expect considerable repeat business. This fact raises an important panel-component selection consideration. The CHIPS Act is focused on production by domestic companies; but if they expand their production outside the US, their panel components need to comply with the electrical standards of those countries. This encourages the selection of panel components that are globally compliant across multiple codes and standards.
Risks and rewards
The CHIPS Act is the largest single government investment committed to increasing US production capacity. There will be incredible demand for the technology needed to build the required manufacturing equipment and facilities, with equally incredible opportunities for panel builders in this market. Successfully serving this market requires panel builders to partner with component providers able to meet the unique needs of the chipmaking industry.
See related blog post “3 Solutions for power panels in semiconductor fabs”.
Dave White, PE
Global Applications Specialist
1 Forbes: What Is The Semiconductor CHIPS Act, And Why Does The U.S. Need It?, August 15, 2022.
2 “How microchips are made“. www.ASML.com. 2023.
3“Bringing energy efficiency to the fabs“. www.Mckinsey.com. 2023.