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Chip Industry Pushes for Innovations, Facing Booms and Bottlenecks

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As supply chain bottlenecks and materials shortages continue to challenge both the U.S. and the world, companies in the semiconductor industry are working hard to meet high-quality standards, achieve strong technological innovations and keep up with the growing demand.

To meet these goals, chip producers as well as all their suppliers are continuously investing time and funds into new products, technologies and facilities.

SGL Carbon, a global manufacturer of products derived from carbon and graphite, is part of this supply chain for chip producers.

Heavily invested: The company, which has its North American headquarters in Charlotte, North Carolina, has been investing significantly in its semiconductor-related production while working hard to meet demand and keep pace with the ever-shifting market.

  • Over the past four years, SGL Carbon invested approximately €30 million into enhancing its production capacities and a modern clean-room environment in St. Marys, Pennsylvania, the home of its main North American operations related to the semiconductor industry.

Smaller size, bigger impact: The semiconductor market is a dynamic sector, and its applications are now more essential than ever to everyday life, according to SGL Carbon Vice President of Marketing and Sales Doug Garda. As chips get smaller, their efficiency and performance are getting bigger—and so is the global appetite for them.

  • “We’re seeing more and more demand globally, and the infrastructure that exists in the industry isn’t sufficient to meet those demands,” Garda said. “Especially with the Internet of Things, e-mobility, LED lighting and automated production, there are so many more applications and high-performance variants of chips required for the future. We need to meet that very steep demand curve.”

Global shortages: While in development, semiconductor chips can cross international borders 70 times before the end product reaches a consumer, fueling significant complexity in the manufacturing process and supply chains.

  • With the onset of the COVID-19 pandemic, labor challenges, shifts in consumer needs and general unpredictability have fed worldwide supply issues.

High demand: In the midst of these shortages, the market for silicon-based wafers, used for regular chips, is expected to grow by 5% annually over the next five years. However, the market for special silicon-carbide-based wafers, used for high-performance chips, is expected to grow by 30% or more annually over the same period.

A critical market: Sometimes described as the “brains” of electronic devices, from automobiles to home appliances to personal electronics and medical devices, semiconductors are critical components for all sorts of manufactured products. A shortage in semiconductors creates ripples all across the manufacturing industry.

  • “The semiconductor market is a key component to any region’s manufacturing needs right now,” said SGL Carbon NA Network Operations Manager Tom Detsch. “It’s one of the most important opportunities of our time—and we’re of course also looking for funding options to further grow.”

Eye on Congress: The U.S. House of Representatives and Senate have both considered legislation designed to strengthen the U.S. semiconductor industry, but differing bills have left Congress with varying approaches.

  • The House passed a bipartisan CHIPS Act in the National Defense Authorization Act authorization last year, but it lacked funding. The funds were instead included in subsequent legislation, the America COMPETES Act.
  • Meanwhile, the Senate passed its CHIPS Act funding through the United States Innovation and Competition Act of 2021 (USICA).

“The question remains: what’s next?” said Detsch. “These markets are growing. How much is going to be in the United States, and how much will be outside? There’s government funding being looked at here in the U.S. and abroad. That’s something that would be interesting for us in the U.S. if something like that were to be available.”

Our take: The NAM is strongly supporting efforts to increase domestic chipmaking capacity here in the United States and is urging the federal government to help make that goal a reality.

The last word: “We’re a solutions provider, and demand for our graphite products has expanded rapidly,” said Garda. “Without graphite-based equipment, no semiconductors could be manufactured. Thus, this will be a growing market for us and for North America in general for a long time.”

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