Chip supply chains cannot simply be relocated as US rebuilding faces a generational task

Rebuilding semiconductor production in the United States requires an ecosystem of suppliers, specialist skills and joint development that can take a generation to establish. Moving factories alone cannot reproduce the relationships and accumulated knowledge behind advanced chips.

In an October 24 interview with Bloomberg, journalist Gideon Lewis-Kraus questioned the tendency to discuss semiconductors as though they were natural resources that could simply be extracted elsewhere. Describing the research behind his New Yorker article, Sandcastles, he said relocating one part of the industry could not bring the entire supply chain with it.

Lewis-Kraus pointed to Dutch equipment maker ASML and its extreme ultraviolet lithography technology as an example of how that ecosystem works. ASML asked German optics supplier Zeiss to commit to producing mirrors it would need in 10 years, even though the technology did not yet exist. Zeiss, in turn, needed glass suppliers to develop materials with properties that were not yet available. Such commitments required companies across the supply chain to pursue inventions whose feasibility remained uncertain, he said.

The machinery itself illustrates the difficulty of expanding production. Lewis-Kraus described lasers striking microscopic droplets inside a vacuum chamber 60,000 times a second to generate light, which exceptionally smooth mirrors then direct through a system that transfers circuit patterns onto chips. Precision positioning equipment is also essential, and development involved overcoming obstacles that engineers had not anticipated at the outset.

That complexity limits how quickly output can rise through process improvements alone, he said. Changes at one supplier require coordination across the wider industry. Even the transitions from 6-inch to 8-inch and then 12-inch wafers required companies to agree on a shared roadmap about 15 years in advance, according to Lewis-Kraus.

He also described Moore’s law as a self-fulfilling expectation sustained by collective effort, rather than an automatic physical law. Companies including Apple design products around chips that do not yet exist, while equipment makers and their suppliers work to deliver the technology those plans require.

Recreating production capacity also depends on practical expertise that cannot simply be transferred through blueprints, Lewis-Kraus said. Highly specialized process knowledge resides within communities of practitioners, making the relocation of an individual facility insufficient to reproduce the surrounding industrial network.

Nevertheless, his reporting left him more optimistic about the intent and implementation of the CHIPS Act. Mike Schmidt, who helped oversee its implementation for the Biden administration, told him the effort was conceived as a 30-year undertaking rather than a project tied to a short political timetable. Lewis-Kraus said that horizon allows time for the broader ecosystem to develop around manufacturing capacity.