{"id":19619,"date":"2022-01-19T06:00:00","date_gmt":"2022-01-19T11:00:00","guid":{"rendered":"https:\/\/a2globalelectronics.com\/?p=19619"},"modified":"2022-01-18T16:12:49","modified_gmt":"2022-01-18T21:12:49","slug":"chips-act-means-for-defense-aerospace-industries","status":"publish","type":"post","link":"https:\/\/a2globalelectronics.com\/ja\/defense-aerospace\/chips-act-means-for-defense-aerospace-industries\/","title":{"rendered":"What the CHIPS Act Means for the Defense and Aerospace Industries"},"content":{"rendered":"

Not long ago, the United States manufactured over a third of the world\u2019s semiconductors. But as other countries rose to challenge that dominance, America\u2019s contribution waned \u2014 falling all the way to 12% of international output<\/a>. The CHIPS for America Act is slated to change that.<\/h2>\n\n\n\n

Introduced in June 2020 and passed a year later, this piece of legislation<\/a> earmarks $52 billion for semiconductor research, design, and production in a bid to increase onshore manufacturing. On the whole, expanding capacity stateside would reduce shipping times, increase quality assurance, and boost local economies. But will this historically large program yield immediate results?<\/p>\n\n\n\n

For the defense and aerospace industries, the answer is no \u2014<\/a> and that comes down to two main factors.<\/p>\n\n\n\n

Fab Construction<\/h2>\n\n\n\n

Fabrication plants \u2014 \u201cfabs\u201d for short \u2014 take raw silicon and refine it to create integrated circuits. However, building this crucial infrastructure takes heavy investment, in terms of both time and money.<\/p>\n\n\n\n

Just one fab can cost anywhere from $10\u2013$20 billion and take 3\u20135 years to build<\/a>. Even with the introduction of an investment tax credit, as proposed by the FABS Act<\/a>, building a foundry from the ground up remains prohibitively resource-consuming. And once they come online, orders can require 70 weeks of lead time to fulfill.<\/p>\n\n\n\n

Should American manufacturers begin increasing production capacity, it wouldn\u2019t come quickly enough to alleviate semiconductor scarcity \u2014 not just for tech companies, but for the aerospace and defense industries as well. Furthermore, this solution alleviates future <\/em>supply constraints; without a group like A2 Global leading their procurement efforts, businesses will continue feeling the ill effects of present-day shortages.<\/p>\n\n\n\n

Advancing Technology<\/h2>\n\n\n\n

Despite first appearing in 1965, Moore\u2019s Law<\/a> holds true: As semiconductor manufacturing processes become more advanced, more transistors can be packed into the same amount of space \u2014 increasing processing power and boosting the potential for continuous advancement. And as demand for these new-age components grows, semiconductor fabs will increasingly prioritize their production.<\/p>\n\n\n\n

In the long-term, innovation will dictate the type of technology found in fabs. Scaling newer manufacturing processes also allows producers to expand their profit margins. These shifts, however, create a vacuum where demand for older <\/em>tech far outstrips supply. For most of the last decade, production capacity for new chips grew 14% on a compounded annual basis; over the same period, mature technologies saw increases of no more than 6%.<\/a><\/p>\n\n\n\n

In short, manufacturers who use last-generation components may continue to experience shortages, regardless of any upticks in overall semiconductor production. Aerospace and defense \u2014 sectors that, traditionally, rely even more heavily on old tech \u2014 have other challenges: They won\u2019t receive priority in the CHIPS Act and can\u2019t enjoy the benefits of onshored manufacturing. But with a global network of reliable suppliers, accessible via procurement partners like A2 Global, they\u2019d have a better chance of sourcing the hard-to-find components they need.<\/p>\n\n\n\n

Between the prioritization of cutting-edge tech and the sheer investment required to build fabs, companies in the defense and aerospace industries might find themselves in a tricky situation. However, by joining forces with A2 Global, they can better react and adapt to future fluctuations and disruptions. Submit an RFQ today<\/a> to learn more.<\/p>\n\n\n\n

Read more:<\/p>\n\n\n\n