The global semiconductor shortage that began in 2020 wasn't just an inconvenience—it was a wake-up call. Semiconductors are in everything from smartphones to fighter jets, and the United States produces only about 12% of the world's chips, down from 37% in 1990. The CHIPS and Science Act is investing $52 billion to reverse this trend, creating massive opportunities for manufacturers across the supply chain.
The Scale of the Problem
U.S. Semiconductor Position
12% — of global chip production (down from 37% in 1990)0% — of the most advanced chips (sub-5nm) produced domestically75% — of chip manufacturing concentrated in East AsiaTaiwan alone — produces 60%+ of advanced semiconductors
Economic Impact
The 2020-2023 chip shortage cost the global economy an estimated $500 billionU.S. auto industry alone lost $210 billion in revenueDefense programs experienced 12-18 month delays due to chip shortagesEvery major industry was affected: automotive, medical, defense, consumer electronics
National Security Implications
Modern weapons systems contain thousands of semiconductorsF-35 fighter: Thousands of chips per aircraftGuided missiles, radar systems, communications—all depend on chipsA Taiwan conflict could instantly cut off advanced chip supply
The CHIPS Act Response
Funding Overview
$39 billion — in manufacturing incentives$13 billion — for R&D and workforce development$500 million — for international supply chain security25% investment tax credit — for chip manufacturing facilities
Major Projects Announced
| Company | Location | Investment | Jobs |
|---------|----------|-----------|------|
| TSMC | Arizona | $40 billion | 10,000+ |
| Intel | Ohio | $20 billion | 7,000+ |
| Samsung | Texas | $17 billion | 2,000+ |
| Micron | New York | $100 billion | 9,000+ |
| GlobalFoundries | New York | $11 billion | 1,000+ |
Beyond the Fabs
The CHIPS Act isn't just about chip fabrication. It funds the entire ecosystem:
Advanced packaging and testingMaterials and chemical supplyEquipment manufacturingR&D and designWorkforce development
Opportunities for Small Manufacturers
1. Fab Construction and Equipment
New semiconductor fabs require massive amounts of:
Precision machined components — Ultra-clean metal partsPiping and fluid handling — Specialty gas and chemical delivery systemsHVAC and clean room — Environmental control systemsElectrical systems — Power distribution and controlConstruction materials — Specialized building components
2. Semiconductor Materials
Domestic production of semiconductor materials:
Silicon wafers — Base material for most chipsPhotoresists — Light-sensitive chemicals for patterningSpecialty gases — Ultra-pure gases for processingChemical mechanical planarization (CMP) slurriesSputtering targets — Metal targets for thin film deposition
3. Advanced Packaging
The fastest-growing segment of semiconductor manufacturing:
Substrates — Multi-layer circuit boards for chip packagingLead frames — Metal structures connecting chip to packageBonding wire — Gold and copper wire for chip connectionsEncapsulation materials — Protective coatings and moldsTesting equipment — Automated test systems
4. Support Equipment
Every fab needs ongoing supplies and equipment:
Wafer handling — Robots and transport systemsMetrology — Measurement and inspection equipmentFiltration — Ultra-pure water and air filtrationWaste treatment — Chemical waste processing systemsMaintenance parts — Replacement components for fab equipment
5. Defense-Specific Semiconductors
The DoD needs trusted, domestic sources for:
Radiation-hardened chips — For space and nuclear applicationsCustom ASICs — Application-specific integrated circuitsFPGAs — Field-programmable gate arraysPower electronics — For military vehicles and systemsRF/microwave devices — For radar and communications
How to Position Your Business
For Existing Manufacturers
Assess your capabilities against semiconductor supply chain needsInvest in clean room capability if applicableObtain relevant certifications (ISO 9001, AS9100D, IATF 16949)Build relationships with fab operators and equipment companiesPursue CHIPS Act funding for capability development
For New Entrants
Identify a niche in the semiconductor supply chainStart with less capital-intensive segments (packaging, materials, services)Partner with established semiconductor companiesLeverage SBIR/STTR grants for technology developmentConnect with regional semiconductor clusters
For Defense Contractors
Understand trusted foundry requirementsPursue DMEA (Defense Microelectronics Activity) programsInvest in secure semiconductor handling capabilitiesBuild relationships with defense semiconductor suppliersDevelop expertise in radiation-hardened and custom devices
The Workforce Challenge
The semiconductor industry needs an estimated 100,000 new workers by 2030. This creates opportunities in:
Training programs — Developing semiconductor workforce curriculaApprenticeships — On-the-job training partnershipsCommunity college programs — Technical educationVeterans transition — Military-to-semiconductor career pathwaysWorkforce development services — Recruiting, training, placement
Conclusion
The semiconductor crisis is being addressed with unprecedented investment, but rebuilding domestic capacity will take years. For manufacturers who position themselves now—by building capabilities, pursuing certifications, and developing relationships—the semiconductor supply chain offers decades of growth opportunity. The question isn't whether the U.S. will rebuild its semiconductor industry. It's whether your company will be part of it.
Ready to Take the Next Step?
Whether you're a small manufacturer seeking defense contracts, a government buyer looking for qualified suppliers, or a business owner pursuing CMMC certification, KDM & Associates and the V+KDM Consortium are here to help.
Join the KDM Consortium Platform today:
Schedule a free introductory session to learn how we can accelerate your path to government contracting success.
Whether you're a small manufacturer seeking defense contracts, a government buyer looking for qualified suppliers, or a business owner pursuing CMMC certification, KDM & Associates and the V+KDM Consortium are here to help.
Join the KDM Consortium Platform today:
[Register as a Supplier (SME)](/register?type=sme) — Get matched with government contract opportunities, access capacity-building resources, and connect with prime contractors.[Register as a Government Buyer](/register?type=buyer) — Discover qualified, defense-ready small businesses and streamline your procurement process.
*Schedule a free introductory session to learn how we can accelerate your path to government contracting success.*
