One of the signature achievements of Congress this year was the passage of the CHIPS and Science Act. This $250 billion package of new funding will support the largest research and development program in US history and will significantly expand semiconductor manufacturing capacity in the US.
The act will also influence US third-party logistics and warehousing operators, as it is expected to impact supply chain flows and US companies that support semiconductor fabrication manufacturing in China.
One of the effects of the act is curbs on exports of supercomputer chips and US wafer fab equipment (WFE) to China, and the US teams that support them. Essentially, the act restricts exports of certain US-made equipment, as well as the skilled US employees who provide on-the-ground, minute-by-minute support for those Chinese installations.
Without that, on-site technical support will cease, which could lead to China-based fabs eventually shutting down, given that US companies or people would no longer be allowed to work in Chinese fabs. It could also have potential impact on order backlogs to customers in China and equipment that has already shipped.
All this means that current supply chain flows and strategies of equipment manufacturers will be impacted. It may require more capacity in the US to store parts and components, equipment that is on backorder due to go into production, and finished goods available for export.
3PLs need to be prepared to bring quick, flexible solutions to these companies, which now face new challenges in their supply chains. We have to be nimble as manufacturers need our support. That’s going to put more pressure on an already tight market for warehouse space in the Bay Area and other locations such as Phoenix where fab equipment manufacturers operate. It’s an opportunity for US 3PLs to really show their skills and step up to meet these new challenges.