Who Was Onshoring in 2023?

Incentivized by the CHIPS and Science Act and spurred by political turmoil to re-evaluate supply chain priorities and mitigate risks, the number of U.S. companies investing in reshoring their operations has started to unravel the globalization of supply chains.

Reducing overseas dependence comes with additional benefits such as shortened lead times, the potential to decrease inventory, bypassing tariffs, keeping intellectual property closer to home, and a more agile supply chain that can better respond to fluctuating customer demands.

That's not to say that the world—and its supply chains—isn't as interconnected and interdependent as ever. However, suppliers and manufacturers are increasingly exploiting the opportunities that come with reshoring and building the resilience and agility the market demands.

The U.S. Accelerates on Reshoring

Consulting firm Kearney says reshoring has moved from "a strategic possibility to a potent market reality."

"We see a significant shift in this year's Reshoring Index, which reflects a broader rewiring of global supply chains and marks the first time domestic manufacturing growth outpaced Asian LCC [low-cost-country] imports growth since 2019."

Kearney uses the external electronic manufacturing (EEM) industry as an example of an industry undergoing drastic supply chain changes, stating that the ongoing electronification of products and the need to reset today's global supply chains will lead many OEMs to partner with EEMs to enable and accelerate the needed transition by outsourcing their end-to-end global supply chains.

Benefitting from the CHIPs Act of 2022, technology companies have started bringing tech manufacturing home and are re-establishing the U.S. as a global leader in this foundational technology.

Intel

In September, technology company Intel received a $600 million onshoring grant from the Ohio government to support the construction of the company's new manufacturing campus in Licking County, which will include two chip factories. 

As part of the grant agreement, Intel has committed to generating $405 million in annual payroll, creating 3,000 jobs, and investing over $20 billion in fixed assets in Ohio by the end of 2028.

Micron

Micron Technology, Inc. announced plans and has taken visible steps in building the largest semiconductor fabrication facility in the history of the United States in Clay, New York.

The company intends to invest up to $100 billion (the largest private investment in New York state history) over 20-plus years in the construction of a new "megafab," $20 billion of which is planned to be invested into the first phase by the end of the decade. The megafab will increase the domestic supply of leading-edge memory and create nearly 50,000 jobs, including approximately 9,000 high-paying Micron jobs.

According to Micron's press release, construction will begin in 2024, and production output will ramp up in the latter half of the decade. The New York megafab is part of the company's strategy to "gradually increase American-made leading-edge DRAM production to 40% of the company's global output over the next decade. "

Samsung

South Korean giant Samsung originally planned to spend $17 billion on building a semiconductor fabrication plant in the city of Taylor, Texas, with the start of production expected in the second half of 2024. However, the price tag has ballooned to $25 billion, and production is delayed until 2025.

Samsung's new fab in Texas is the first in an aggressive twenty-year plan to build ten semiconductor fabs on a single site with a total price tag of over $170 billion, with the final fab planned for completion sometime in 2042. 

Texas Instruments

In February, Texas Instruments announced plans to build its next 300-millimeter semiconductor wafer fabrication plant in Lehi, Utah. The new fab will be located next to the company's existing 300-mm semiconductor wafer fab in Lehi, LFAB.

The $11 billion investment marks the largest economic investment in Utah's history.

"This new fab is part of our long-term, 300-mm manufacturing roadmap to build the capacity our customers will need for decades to come," said Haviv Ilan, T.I. executive vice president and chief operating officer, and incoming president and chief executive officer.

This is in addition to the company's up to $30 billion investment in four new connected fabs in Sherman, Texas, that will manufacture millions of analog and embedded processing chips daily. Production from the first fab is expected as early as 2025.

Taiwan Semiconductor Manufacturing Co.

Originally slated to be operational by the end of 2024, labor shortages have delayed the chipmaking giant's start of production, pushing back the opening of its $40 billion chip factory in Phoenix, Arizona, until 2025.

"We are now entering a critical phase of handling and installing the most advanced and dedicated equipment," said Mark Liu, TSMC chairman, during the company's second-quarter earnings call. 

"However, we are encountering certain challenges as there is an insufficient amount of skilled workers with those specialized expertise required for equipment installation in a semiconductor-grade facility."

GlobalFoundry

GlobalFoundries and G.M. announced a strategic, long-term direct supply agreement for U.S. production of semiconductor chips. The partnership will bring a critical manufacturing process onto U.S. soil and establish a dedicated capacity channel exclusively for G.M. chip supply with GlobalFoundries manufacturing for G.M.'s key chip suppliers in their advanced semiconductor facility in upstate New York.

The agreement aligns with G.M.'s strategy to reduce the number of unique chips required for tech-heavy vehicles and produce in larger volumes with improved quality and better predictability.

Wolfspeed

North Carolina-based semiconductor manufacturer Wolfspeed is gearing up production in "Mohawk Valley," its Marcy, New York, Silicon Carbide fab facility. The world's only 200mm silicon carbide manufacturing facility officially opened in April 2022 and supports increasing demands from the growing electric vehicle (E.V.), 4G/5G mobile, and industrial markets. 

The brand-new, fully automated power wafer fabrication facility will be fully automotive-qualified and is targeting 20% utilization by the end of June 2024, its fiscal year. According to BNN Bloomberg, to meet the need for more so-called SiC wafers, it's also investing in another facility in North Carolina to grow the crystals that will become the wafers to form the base on which the chips are then built.

Rogue Valley Microdevices, Inc.

Microelectromechanical systems (MEMS) specialist Rogue Valley Microdevices announced in June its acquisition of a 50,000-square-foot commercial building in Palm Bay, Florida. 

Once converted, the facility will serve as the company's second microfabrication plant, manufacturing 8 and 12-inch wafers with a WSPM of 21,000. Construction is expected to be completed by 2025.

Unfortunately, onshoring projects don't transpire overnight, requiring labor force skill development and significant capital investment. Increased capex spending will have a domino effect. Bank of America cites Rockwell Automation, Emerson Electric, Eaton, and Fortive as equipment makers that are expected to benefit from the increased spending.

The benefits to the U.S. economy can be substantial, impacting industry and trade, increasing jobs, reducing the costs of transportation and shipping of products, and facilitating healthy economic growth, all thanks to reshoring, but it won't be felt tomorrow. It will take years to see real change take place. But the trend is a positive one, and the impacts will be worth the wait.