Chips, Open RAN, 6G … governments around the world are pouring investment into tech, hoping to gain a strategic and economic advantage. The US government wants to offer relatively modest funding and maintain a market-driven approach—but it knows it can’t afford to fall behind.
WASHINGTON, D.C.—The Covid-19 pandemic forced new realizations about just how crucial high-speed broadband access is, but it also illuminated numerous weaknesses in the international supply chains that had been built up over decades. This, in turn, drove governments around the world to reexamine the importance of domestic chip and microelectronics production and supply chains that don’t rely exclusively on one area of the world for components or finished products.
As a result, the pandemic has resulted in unprecedented dollars being poured out to support telecom and tech development, both to avoid unexpected ripple effects like the stalling of automotive production due to the chip shortage, and to maintain or gain economic and technical advantage. In the U.S., this has taken form in vast amounts of covid relief funding for broadband and culminated in the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program, as well as the CHIPS and Science Act of 2022, with a $280 billion price tag over 10 years for semiconductor manufacturing, research and development and workforce development and support, with approximately $39 billion in incentives focused on an effort to meaningfully increase U.S.-based semiconductor manufacturing across cutting-edge chips, legacy chips that make up the bulk of current needs and advanced packaging processes.
That sounds like an enormous amount of money. But at this week’s 6G Symposium in D.C., panel moderator Jack Gold, president of technology consulting firm J. Gold Associates, pointed out that bringing new chip fabrication facilities online is a “long term and very expensive process”—and one where the amount that Congress set aside to incentivize domestic production is a drop in a very large bucket. Companies are spending large amounts of money themselves to boost their production and diversify their supply chains—a White House fact sheet about the CHIPS and Science Act mentions that a single company, Micron, is already planning to invest $40 billion through 2030 in boosting its U.S. memory production; that’s part of a larger $150 billion planned investment by Micron through 2030. Other governments around the world, which saw the same supply squeeze and ripple-effects that the U.S. did, are also anxious to woo the semiconductor industry and putting up the dollars to do so.
“The covid pandemic showed us that okay, that all of our semiconductor production is in this one region. Shipping lanes start having an issues, factories start getting shut down— there are no alternatives,” said Jaydee Griffith, chief technologist for NTIA’s Wireless Innovation Fund. The U.S. federal government’s efforts, he went on, are about “ensuring a more resilient supply chain, so whether the chips are produced in Asia, Europe or the United States, that regardless of what the world may throw at us, we can still keep producing this critical infrastructure, whether it be semiconductors for defense applications, automotive, general computing, or telecom.”
Former FCC commissioner Michael O’Reilly—who noted that he spent decades in government, fighting the very industrial policy that the CHIPS Act embodies—said that while he hopes the work succeeds and the funds are spent properly, the harder question at the heart of the debate is, can the United States “out-subsidize” Europe and Asia? “I think that’s really tough. They have huge histories and do it very well. We don’t. We don’t have industrial policy in the United States, and this is kind of a diversion for us,” O’Reilly said.
The $39 billion, in terms of chip fabs, “is not going to buy you that much,” he added, going on to say that considering the CHIPS Act program goals on and 2030 timeline, “there’s a real good chance a lot of that money is not going to be successful.”
“You want to have, no matter where the chips come from, you want to make sure that those lanes and opportunities exist. The fact that they are are supposed to be in the United States, and those fabs are supposed to be here, is a heavy, heavy lift,” he said.
He also tied the program into 6G, saying that “the timelines may not correspond.” 6G is expected to emerge around 2030—which is the point at which current programs will be winding down their investments. It’s difficult to know where the U.S.’ investments might take it by the end of the decade, but a few things are clear: it takes several years to bring new fabs online and scale their production capabilities. And while the U.S. makes about 10% of the overall global chips, it is essentially starting from zero on advanced chip manufacturing and on packaging. Meanwhile, fundamental R&D for 6G is happening already—in earlier remarks, Rajesh Pankaj, EVP and CTO of InterDigital, spoke about how chips don’t emerge without lengthy foundational work. “A chip is not something that is isolated. It is part of a chain that starts with innovation and standardization inside of a system,” he said, with networks, devices, services and applications coming later. The point being that trajectory lines are already emerging for both 6G and U.S. chip manufacturing, and, O’Reilly said, “I think those lines don’t actually line up right now.”
The CHIPS Act also looked ahead and put a small amount (relatively speaking) into focused on boosting R&D into open and interoperable systems for 5G-and-beyond systems—$1.5 billion over a decade. Is that enough, Gold asked? “When you look at it holistically, and you look at what telecommunications companies are spending annually on research and development, it’s nothing—they’re spending billions of dollars a year,” said Amanda Toman, who is the head of that program, the Wireless Innovation Fund at NTIA. “We recognize that, and we recognize the need that we have to work with industry and to work with our international partners” to leverage both public and private monies to stretch the existing funds. And, she pointed out, not all government-funded R&D investments will pan out. “This is R&D, at the end of the day,” she said. “We’re not going to get everything right. But we are going to do our best to ensure that where we’re applying the funding will have the biggest potential to have an impact.” She said that it will be crucial for the U.S. government and its partners in industry and internationally to align around common goals—and to have a realistic sense of what can be achieved. “We can’t address this entire problem with one and a half billion dollars,” she said. The focus, Toman said, should be on supporting capabilities that are unique to the U.S. and filling technology gaps; things that private companies would be unlikely to take on or where a common hurdle exists that could be addressed. The first grants from the program were announced in August, and went to support development of testing solutions (in part due to industry feedback that this was an area that needed more investment) as well as the use of AI for modeling and measuring wireless environments. Looking for gaps that a relatively small amount of funding can fill, Toman said, “is something we are thinking about all day, every day”—and will be reflected in the next areas of technological focus when the Wireless Innovation Fund puts out its next request for applications for funding.
