A brief history of the US semiconductor industry, and how the US can regain its edge in manufacturing to create a more secure and resilient supply chain
Employ America : Tweets: @lizabevin , @rogueonomist , @hassankhan , @michaelsjoel , @maxjerneck , and @ryanlcooper Tweets: Liza Toher Reed / @lizabevin : I feel this so hard: “ “Eliminating redundancies” and “increasing fragility” are two sides of the same coin.” from: https://employamerica.medium.com/ ... by @hassankhan and alex williams. a brief thread (1/) Ammar Khan / @rogueonomist : https://employamerica.medium.com/ ... Substack detailing how US lost its edge in semi-conductor development, relying more on outsourcing, resulting in rise of TSMC in Taiwan 2/ @hassankhan : A short thread building on my piece with @tragicbios on the history of industrial policy in the US semiconductor industry and the endless frontiers act https://employamerica.medium.com/ ... Joel Michaels / @michaelsjoel : Crucial article by @tragicbios @hassankhan @employamerica. “Decades of minimized labor costs have shrunk the pool of skilled technologists...while decades of underinvestment in capacity hampered domestic firms' ability to respond to the present shortage.” https://employamerica.medium.com/ ... Max Jerneck / @maxjerneck : Important point about industrial policy in @tragicbios and @hassankhan piece on semiconductors. It's not about promoting efficiency or building national champions to avoid duplication. Duplication is the point. You have to tolerate “waste” https://employamerica.medium.com/ ... https://twitter.com/... Ryan Cooper / @ryanlcooper : “Labor is not just a cost center at the technological frontier, but rather, a critical input to the innovative process.” @tragicbios @hassankhan https://employamerica.medium.com/ ...
Context & Ripple Effects
Employ America's argument — that decades of outsourcing and cost-minimization hollowed out US chip manufacturing and handed the edge to Asian producers like TSMC — reads today as an early brief for the policy wave that followed. The authors' core claim is that 'eliminating redundancies' and 'increasing fragility' are the same move: efficiency-driven supply chains are fragile by design.
That framing anticipated both the CHIPS-era boom of 50+ announced projects and its two known constraints: a worker shortage, and the [[a:981350|supply-chain resilience myth showing that replicating full chipmaking inside one country just relocates bottlenecks]]. The piece is the intellectual baseline against which later coverage measures whether subsidies can rebuild what outsourcing dismantled.
First-order effects
- US chip designers that contracted manufacturing out to TSMC now face a policy environment pushing to re-shore capacity they spent decades shedding, with Intel's earlier consideration of outsourcing its own fabs marking the symbolic end of integrated US production.
Second-order effects
- Subsidized fabs collide with the labor constraint Employ America identified: officials behind the 50+ project boom already flag worker shortages, forcing parallel pushes on immigration reform and STEM investment as a condition of the build-out succeeding.
Third-order effects
- If duplication-tolerant industrial policy holds, the industry shifts from pure efficiency arbitrage toward regional redundancy — but the Nikkei reporting on resilience bottlenecks suggests even subsidized domestic capacity stays dependent on cross-border process steps, capping how much 'security' on-shoring actually buys.
The trend: US semiconductor policy is moving from efficiency-first outsourcing toward state-subsidized redundancy, with labor supply and irreducible foreign process steps setting the ceiling on how resilient the rebuilt chain becomes.