Latest In Capital News
Oct 20, 2021
October 20, 2021 - Advertisement - A global semiconductor shortage has prompted chip makers around the world to plan factory expansions. Intel Corporation - Advertisement - In September it pledged up to $95 billion for more chip-making capacity in Europe, after detailing US expansion plans earlier this year. The world’s leading contract chip maker said it would build a chip manufacturing plant in Japan this month. Samsung Electronics Co. - Advertisement - and GlobalFoundries Inc. has also announced capital investment plans this year. The chip shortage has led governments to highlight how semiconductors have become more important to their economies, often by offering subsidies to entice investment, to try to ensure supply to them. Mr Mehrotra said he supports US government proposals from the Biden administration and lawmakers to boost domestic chip production, including bills in Congress that would provide grants for plant investment and long-term tax incentives . “The economics needs to work,” he said, adding that US factories could be 35% to 45% more expensive than low-cost countries. In June the Senate passed legislation to increase government spending on technology research and development, and that includes $52 billion to encourage semiconductor production. The House has yet to take the measure, while negotiations on the broader legislation continue. The semiconductor industry is also lobbying for investment tax credits. Mr Mehrotra said Boise, Idaho-based Micron is urging clarity on US financial stimulus soon. “Decisions regarding investment will need to be made in the years to come, and it takes some time to implement all the plans,” he said. The company plans to exceed its historical average of up to $12 billion in capital expenditure in the current fiscal year, and is targeting about $3 billion in research and development outlay. Mr Mehrotra also said he is seeing signs that the odds of the worst chip-supply are beginning to ease. “The supply crunch that the industry is experiencing is already improving in some and will continue to improve,” he said, although some of the shortfall could last until 2023.