It’s no secret that America—the birthplace of the transistor and, by extension, the modern semiconductor industry—has gradually ceded its leadership in the manufacturing of semiconductors.
These chips power everything from smartphones and cars to satellites, advanced defense systems and artificial intelligence. They are the backbone of the modern economy and the foundation of next generation technology such as quantum computing. Simply put, semiconductors are essential for modern life and critical to our technological future.
For decades, many American semiconductor companies followed a “design here, build elsewhere” strategy that led to a decline of U.S.-based manufacturing from 37% in 1990 to just 10% by 2022.
While these companies were following clear economic logic, the negative consequences to both economic, supply chain and national security should concern us all. Without a strong semiconductor manufacturing base, America is vulnerable in times of crisis. And our leadership role in the technologies of the future that rely on semiconductors is at risk.
The Trump administration has taken bold and necessary steps to reverse this decline. The One Big Beautiful Bill Act enhanced the Advanced Manufacturing Investment Tax Credit, sending a clear signal: the United States is serious about rebuilding its semiconductor manufacturing base. But while supply-side incentives play a critical role in leveling the playing field (especially given the enormous scale of manufacturing in locations such as Taiwan), more is needed to create the demand-side incentives to help companies bring the demand back onshore. Only with a thoughtful combination of both supply- and demand-side interventions will we make meaningful progress to restoring supply chain integrity and resiliency.
