Since the introduction of the Chips Act increased costs were a cause for concern. Many manufacturers and suppliers have expressed a worry that the various cost increases involved in reshoring production would affect business. The major impact of this would be a raised cost of consumer electronic devices at the end of the road.
With the Act in place, and export restrictions on China being introduced, the chip industry faces an interesting predicament. On one hand the Act will increase the number of jobs. It could also give the US a more stable position in the global market. Not only that, but it will encourage foreign investment in the US economy and bring consumers to domestic producers.
All in all it is expected to improve the US chip industry hugely, and the profits and products of it will mean America is a real competitor in the market.
Unfortunately, though, there are a few downsides as well. The cost of most things, including building new fabs and training new staff, is more expensive in the USA. There is currently much less semiconductor infrastructure in place here.
Compared to countries like Taiwan and China, which are already set up for mass production, the US will have to invest a great deal of time and money. Additionally, the labor and equipment is cheaper in Asian countries. Some experts in the industry have predicted the cost of making a chip could increase by 40%
According to one research firm, the cost of a fab in the US can be 80% more than in Taiwan. This isn’t exactly attractive for investors.
The impact on consumers
There has been a massive range of estimates on how much the end-user will be affected by reshoring. One of the most often-discussed products is the smartphone. Providers like Apple and Samsung have had to reorganise thanks to the Act, and change their future plans.
In addition to the chips needed for the phone itself, the cameras also require separate chips and components. The cost of a new iPhone, for example, could increase by $100. Other experts have estimated eye-watering estimates of a $30,000 increase, but this is less likely.
Many companies are expected to try and mitigate the cost passed onto customers. It’s worth noting it won’t be possible, or economical, to do this entirely. There are incentives included in the Chips Act to offset these costs too, but those will only go so far.
A steadfast ally
While the Chips Act might change the chip landscape, Lantek’s stellar service will stay exactly how you like it. With Lantek being a global supplier, we will be able to see which avenue will be more cost effective for your production and guide you in whatever component needs you have. Call us today on 1-973-579-8100, or email us at firstname.lastname@example.org.