Texas Instruments (TI) plans to invest over US$60 billion to expand semiconductor manufacturing in the US.

The initiative will establish seven fabrication plants in Texas and Utah, creating over 60,000 jobs, according to the company’s statement on Wednesday.

The investment aligns with US efforts to boost domestic chip manufacturing amid global tech competition.

TI is working with the US government to produce critical semiconductors used in devices like smartphones, vehicles, and data centers.

US Commerce Secretary Howard Lutnick praised the move as vital for long-term national semiconductor strength.

TI’s announcement follows similar domestic investment pledges by General Motor (GM) and Apple as part of a broader onshoring trend.

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🔗 Source: CNN Business

🧠 Food for thought

1️⃣ TI’s investment continues a long history of critical government-industry partnership

The US government has historically played a pivotal role in developing the semiconductor industry through strategic purchasing power and research funding.

In the 1950s and 1960s, military and NASA contracts were essential to the early semiconductor industry’s growth, with NASA purchasing 60% of all US-produced integrated circuits by the mid-1960s1.

This government demand helped drive innovation and dramatically reduced costs from $32 per chip in 1961 to just $1.25 by 19711.

The semiconductor industry has since grown to become a major economic force, increasing its contribution to US GDP by 265% between 1987 and 2011, outpacing all other major manufacturing sectors2.

During economic challenges between 2007-2011, while the overall US economy stagnated at 0.3% growth, the semiconductor industry continued growing at 5.2%2.

TI’s announcement represents a continuation of this critical government-industry relationship, with Commerce Secretary Lutnick explicitly connecting the investment to the administration’s semiconductor priorities.

2️⃣ Investment reflects intensifying US-China semiconductor competition

TI’s massive expansion occurs against the backdrop of an escalating technological rivalry between the US and China, with semiconductors at the center.

The US currently holds 47% of the global semiconductor market share but has become increasingly dependent on foreign manufacturing, particularly from Taiwan and South Korea3.

This dependence has raised national security concerns, especially as China has made semiconductor self-sufficiency a national priority through initiatives like “Made in China 2025,” which aims for 70% domestic chip production by 20253.

In response, the US has implemented multiple export controls restricting China’s access to advanced semiconductor technologies and manufacturing equipment4.

The competition extends beyond manufacturing to chip design, where the US maintains leadership with 46% of global chip design sales and dominance in electronic design automation (EDA) tools (85% global control in 2021)5.

TI’s investment signals a significant shift toward reshoring critical semiconductor manufacturing capacity, directly addressing vulnerabilities in the US supply chain that have become more apparent during this technological competition.

3️⃣ Challenges remain for broader “made in America” electronics manufacturing

While TI’s expansion represents a major win for domestic semiconductor production, significant obstacles remain for manufacturing complete electronic products in the US.

The modern smartphone supply chain spans 28 countries with hundreds of specialized components – Apple’s iPhone, for example, involves 187 suppliers globally with only about 5% of components currently made in the US6.

Experts estimate that relocating smartphone production like the iPhone to America could increase costs dramatically, with estimates suggesting prices could rise to $3,500 per device without substantial subsidies7.

The US currently lacks the specialized manufacturing infrastructure and workforce skills developed over decades in Asia, creating significant barriers to quickly reshoring electronics production8.

Companies that have successfully manufactured electronics in America, like Purism with its $1,999 Liberty Phone, typically target niche markets and rely on specialized labor pools from adjacent industries like defense7.

These challenges illustrate why TI’s focus on semiconductor manufacturing, rather than complete electronic products, represents the most practical approach to strengthening America’s position in the global technology supply chain.

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