As AI continues to grow and play an increasingly large role in the world, the United States (U.S.) is fighting to have a competitive role in the chip manufacturing field, in order to maintain its economic growth and technological edge. However, countries like Taiwan and South Korea are currently far ahead of the U.S. in chip advancement.
In simple terms, AI chips are specialized computer chips that are designed to advance the performance of AI workloads. There is currently a worldwide shortage of these chips needed for AI systems, and as a result, a race has begun between companies to create more effective and capable semiconductors — a material that serves as a foundation for computers — in order to withstand the complexity of computations in AI models. These chips are extremely important to the future of technology. Jeremy Shrall, an Apple employee who works in the microprocessor and validation department, explains, “What sets custom AI chips apart from a central processing unit (CPU) is that it can do a more limited set of tasks, but can do more of them in parallel.”
If the U.S is not able to strengthen its role as a major player in the semiconductor industry, it could have major implications for the country, and in the U.S’ ability to maintain its competitive edge in technology.
The CHIPS and Science Act, passed under the Biden administration, is a U.S. federal statute that invested nearly $53 billion in funding to bring semiconductor supply chains back to the U.S., create jobs, support American innovation, and protect national security. The Biden Administration rewarded Arizona with the final semiconductor research site built with the funds from the CHIPS and Science Act on Jan. 6, 2025.
This news came as a disappointment to some Oregonians who were hoping to have the new location built in Hillsboro, under Intel. Prior CHIPS Act funding does still directly support Intel’s sites in Arizona, New Mexico, California, and Oregon, which benefits the Hillsboro site but doesn’t give them the investment they hoped for.
The Biden Administration planned to fund the creation of three new semiconductor research sites and offer over 115,000 new jobs in this field across the country. The new semiconductor research site in Arizona will be built at Arizona State University (ASU).
The CHIPS Act funding has helped the U.S. bounce back in the chips manufacturing industry. Explaining the utility of chips, an anonymous source at Intel comments, “AI workloads are rapidly changing and advancing all the time and not all AI chips are the same. Engineers constantly study the specific needs of AI algorithms and simulate AI tasks to determine bottlenecks in existing hardware.”
Another Oregon based company that benefited from the CHIPS Act is HP Inc. HP Inc. has received up to $50 million from the act to renovate its Corvallis buildings, employing up to 150 construction workers to help modernize the campus, in addition adding up to 100 factory jobs.
Though Intel’s headquarters are based in Santa Clara, CA, their largest buildings and operations are home to Hillsboro. While once a renowned chip manufacturer, Intel has been declining in stock and popularity after continuously losing out to competing companies. In 2020, Intel experienced major delays in production that slowed the company’s productivity. Additionally, that year Apple replaced Intel’s chips in their Macbooks with ARM chips, to get rid of Intel’s CPUs.
The New York Times reported in August of 2024 that Intel “would slash more than 15,000 jobs to aid a turnaround plan, as the company tries to recover after a series of stumbles.” Following this announcement, on Dec. 1 2024, Intel CEO Patrick Gelsinger stated he would be retiring from his role after 13 years leading the company, and he has been temporarily replaced by two executives of the company until the company can find a permanent replacement.
NVIDIA attempted to buy the semiconductor business ARM for $40 billion in 2020, but the deal fell through in early 2022. NVIDIA, a world leader in AI, has defined the chip industry as a driving force for the next generation of technology with their AI computing capabilities. NVIDIA’s CEO, Jensen Huang, is an Oregon State University graduate, and went onto Stanford before founding NVIDIA in 1993. NVIDIA has since overthrown Apple as the world’s most valuable technology company.
When asked what can make one chip manufacturer more successful than another in the AI market, the same anonymous source from Intel explains, “Building a new AI chip is extremely expensive, both in terms of the cost it takes to design and develop and in the time it takes to bring a new product to market.” They continue, explaining the competition in distribution as well, saying, “Companies that can develop the chips with the best performance and ecosystem support also need the right strategic partnerships to co-develop, produce or distribute their products.”
Comparing Intel, NVIDIA, and AMD, Shrall comments, “NVIDIA and AMD are referred to ‘fabless’ chip designers. This means that they only come up with the designs for how the transistors will be laid out in a chip, and they rely on the Taiwan Semiconductor Manufacturing Company (TSMC) to do manufacturing. Intel is unique in that it is the only company of the three to do both design and manufacturing.”
As AI chips advance with time, security is a crucial factor manufacturing companies need to be cautious of. The cloud is full of misinformation, deep fakes, and hackers who can easily impact people’s personal lives; AI could put users at a unique vulnerability with the sheer amount of knowledge and data it holds. Shrall assures, “There is a lot of effort amongst all of these chip designers to ensure that along with features to improve computation efficiency, there are also features to ensure that your sensitive information is secure from hackers.”
Another concern from Shrall is the amount of energy it takes to design and manufacture the growing demand for chips as AI grows. “Perhaps most concerning to me is [that] the energy demand of the AI revolution is directly in conflict with our current climate crises,” he notes.
AI chips are the chips of the future. AI is necessary for chips to advance, and CPUs are becoming less useful as AI technology advances. Oregon is in the center of a high state global competition in chip manufacturing that will power the future of AI.
