Nvidia’s blockbuster earnings report on Wednesday showed insatiable demand for semiconductors to power new AI systems, and concerns that supply may not be able to keep up.
That could make Washington’s goal of reinvigorating U.S. semiconductor manufacturing in the coming years even more pressing.
The Biden administration is currently in the early stages of a series of announcements about how it will spend $50 billion in tax dollars over the next few years to ensure the U.S. is not left behind.
One big beneficiary is likely to be Intel (INTC), which is building a new factory in Ohio and is reportedly in talks to get up to $10 billion in government funding for it. There is.
Secretary of Commerce Gina Raimondo said: Virtual appearance at Inter Wednesday. He declined to provide new details about what types of government subsidies the company might receive, but emphasized his focus on AI.
“Frankly, this is a huge benefit and opportunity and It’s a source of customers.”
Other major companies making AI chips, from Taiwan Semiconductor Manufacturing Company (TSM) to Micron (MU), are also expected to receive billions of dollars and are currently in talks with the government.
“These are intensive negotiations and we are in the middle of discussions with the main applicants,” a senior administration official said this week, promising further announcements in the coming weeks.
So far, three small manufacturing awards have been promised to BAE Systems (BAESY), Microchip Technology and GlobalFoundries (GFS).
The administration recently announced it may give $5 billion to a public-private consortium called the National Semiconductor Technology Center to rein in administration research activities.
Efforts to “diversify bets”
Raimondo oversees a team that has swelled to more than 200 people responsible for enforcing the CHIPs and Science Act, a law signed 18 months ago and aimed at combating the decline in the U.S. share of semiconductor manufacturing. ing.
Raimondo’s CHIPS Strategy Office is comprised of scientists, supply chain and workforce experts, and more. Her department said her team is focused not only on immediate goals, but also on planning for the potential impact of her AI in the coming years.
Christopher Miller, author of a recent book, said the administration is trying to “spread betting a little wider, which makes sense given that no one knows what the industry will look like in a few years.” I think so,” he says. History of the semiconductor industry.
The question is how much influence the US government can have in a crowded situation. They will have to compete with China, which offers more generous government incentives and perhaps a surge in private initiatives, such as Altman’s goal. To the Wall Street Journal coverageto raise up to $7 trillion for semiconductor manufacturing.
The plan is met with skepticism media and industry Reactions both to whether such a project is possible and to Altman’s attitude.recent altman Posted It’s an obvious reference to the project, perhaps hinting at the possibility of even more astronomical sums being sought, the question “Why not 8” and an abbreviation for an expletive.
Either way, a wide range of stakeholders agree that demand for AI chips will increase. “The amount of chips they need is mind-boggling, even if we cut their expectations in half,” Raimondo said Wednesday, referring to recent talks with Altman and others in the AI field. That’s a huge amount,” he said.
“Manufacturing is definitely the bottleneck.”
The United States continues to follow suit. In 1990, the company produced nearly 40% of the world’s chips, but today less than 10% are made in the United States, according to the White House.
The situation is even worse for the world’s most advanced semiconductors, which are now 100% manufactured overseas, primarily in Taiwan.
Bob O’Donnell, president and principal analyst at TECHnalogy Research, said demand for AI will “organically” lead to a new wave of chip research and design, but restarting the manufacturing side will be helped by government aid. He said it was possible.
“Chip manufacturing is definitely the bottleneck, and we’re seeing that now,” he says.
That’s a point echoed by Nvidia (NVDA) CEO Jensen Huang on Wednesday when he talked about one of the few constraints in a fast-growing business.
“We expect demand to continue to outstrip supply throughout the year,” he told investors on a quarterly earnings call.
Nvidia partners with TSMC, the primary manufacturer of Nvidia’s cutting-edge chips, and other companies in actually manufacturing the chip designs.
Can we use AI to design more AI chips?
Industry and government officials are also grappling with the question of where to design the next generation of AI chips. This is an arena in which the United States currently has an advantage, but it could soon become chaotic.
First, AI is already bringing many new entrants to the chip design business. Major companies from Google (GOOG) to Amazon (AMZN) are exploring designs that advance their AI initiatives and have already shown further interest.
Arati Prabhakar, director of the White House Office of Science and Technology Policy, recently addressed industry representatives gathered at the White House, praising the administration’s overall approach as “just creating a transformative pathway to move technology forward.” “We can rebuild the way society works,” he said. industry. “
“We want to make sure that that happens in a way that creates not only benefits for our industry, but also benefits for the United States,” she added.
O’Donnell noted that smaller companies like Cadence Design Systems, Inc. (CDNS) and Synopsys Inc. (SNPS) want to leverage generative AI in their chip designs, and could be used to design next-generation chips, he added.
“It will probably help us come up with more efficient chip designs,” he said, adding, “Right now it’s a market dominated by NVIDIA, but there’s no guarantee it will still be in five years.”
Ben Werschkul is Yahoo Finance’s Washington correspondent.
Click here for business and money-related political news
Read the latest financial and business news from Yahoo Finance