BayFort View: Semi-conductor manufacturing has been very capital intensive and low on labor since its a highly automated process. So, it was always a mystery as to why the US couldn’t build a domestic chip manufacturing industry. The only reason cited so far was that its highly capital intensive and US companies preferred a more capital-light fabless semi-conductor design business model and left the actual manufacturing to Taiwanese companies. However, the CHIPS act removes the last remaining hurdle by providing capital in terms of tax credits to the tune of 25% of the capex. Owing to this act, the US has a very good chance of becoming the hub of global semiconductor manufacturing.
