U.S. investments in semiconductor research and manufacturing will pay dividends for decades.

Just after the pandemic started early last year, I wrote an article titled, “What Good Will Come From Covid-19?^”. In it, I tried to lend a perspective of gratitude for all the people on the front lines helping us stay safe and healthy during the pandemic.

What was not as clear to me then as it is now is that our societies and cultures have changed forever. Prior to the pandemic, I do not think many of us realized how important networks are in our daily lives. Networks of all kinds - including the networks that bring us electricity, water, sewage, natural gas, gasoline, and of course telecommunications.

Working in the telecommunications industry, it was gratifying to see the positive impact telecommunications has had on keeping people connected, productive, and supported. Last spring, a colleague wrote an article titled, “I Joined the 4 Comma Club in April. What About You?” In that article, it was noted that there was a 47% jump in the number of internet service provider “power users,” or those who consume more than a terabyte of bandwidth (1,000,000,000,000 bytes) in a month. In a statement from March 2020, Microsoft reported a 775% increase in Teams usage in just Italy. All this was made possible by a robust, flexible, and scalable network infrastructure.  

The utility of the network

What is clear now is that telecommunications networks play a vital role in virtually all aspects of our society today. They are a part of most of our daily lives, just like water, sewer, and electricity networks. Connectivity is essential for all our communications, many of our transportation systems, our power grids, our defenses, and more. Telecommunications networks are of strategic importance to our way of life.

Because of Covid-19, many businesses have learned how to remain effective and efficient while their employees work remotely. While this was an evolution well underway for decades, Covid-19 significantly accelerated this transformation. In 2018, Global Workforce Analytics reported that 4.3 million people in the U.S. worked from home at least half the time, up 140% since 2005. Steady growth for sure, but according to the Pew Research Center, as many as 71% of employees are working from home today, and more than half say they want to keep it that way, citing an improved work-life balance and the elimination of wasteful and costly commutes.

The heart of technology

These advancements in telecommunications networks lie in semiconductor technology. This includes the traditional silicon-based processors one might find in a computer, mobile phone, car, or smart toaster. But it also includes semiconductor technology based on other materials such as indium phosphide, which powers the lasers used in fiber optic networks. Covid-19 and other recent events have put a severe strain on the global supply of semiconductor chips, causing many companies to rethink their supply chains to diversify them and/or bring more capabilities in-house.

While, unsurprisingly, the lockdowns and stay-at-home orders both in the U.S. and abroad caused many of the supply chain issues, the shortage was exacerbated by other events such as the severe weather that rolled through Texas, knocking out power grids (networks) in February, and a fire in March at the Renesas Semiconductor Manufacturing facility in Japan that stopped manufacturing.

What many do not realize about the semiconductor supply chain is that the United States is one of the largest suppliers of this technology.

National security at risk

Due to the critical nature of our telecommunications infrastructure, in May of 2019 the United States recognized the security implications of the underlying semiconductor technology and signed an executive order that blocks U.S. companies from buying foreign-made telecommunications equipment deemed a national security risk. Between the recent and numerous cyber-attacks on U.S. infrastructure and the understanding of exactly how critical our telecommunications infrastructure is to society; this seems like a prudent move to improve national security. This ban has been extended and the U.S. has taken an additional step and further restricted companies from supplying items that can be used in 5G devices.

The government is here to help?

The U.S. government has acted quickly on measures to make sure this type of shortage does not impact us as much again. Late last year, Rep. Michael McCaul [R-TX] introduced and the U.S. Congress passed the H.R.7178 - CHIPS for America Act within the National Defense Authorization Act (NDAA) to help ensure our supply of semiconductors. It provides for incentives for semiconductor equipment or manufacturing facility investment through 2026. The U.S. has also made clear its support for securing the supply chain for critical new technologies with the passage of the Endless Frontiers Act. This follows similar government investments made by other countries that are leaders in semiconductor manufacturing.

These funds can be used by semiconductor manufacturers to retool factories, upgrade equipment, and expand operations; to increase the supply chain stability of critical semiconductor technologies; and to enable continued innovation leadership. Grants and support like this can accelerate the development of innovative next-generation technologies that can serve to enhance critical network infrastructure and support growing bandwidth demands.

While we all want to see a global marketplace that is as fluid and as unrestricted as possible, it is important to remember and plan for events that can quickly change what’s “normal.”