A boost in chip manufacturing is expected to boost U.S. innovation

US efforts to increase domestic production of semiconductors will have a beneficial effect on homegrown innovation, in part by providing tech startups with the resources they need to scale new technologies, industry experts say.

In turn, they said, startups that depend on a steady supply of semiconductors will attract more private investors as chip availability becomes less vulnerable to species supply chain disruptions unleashed by the Covid-19 pandemic or Russia’s invasion of Ukraine – reducing risk for venture capital investors.

“Two guys in a garage is great,” said Edlyn Levin, co-founder and chief scientific officer of America’s Frontier Fund, a nonprofit venture capital fund that invests in chipmakers. But taking the idea and scaling it at a company requires access to multibillion-dollar facilities, she said.

Ms. Levin, speaking Tuesday at The Wall Street Journal CIO Network’s online summit, said a strong domestic semiconductor industry could help unlock innovation down the road. Chips are a key component of technologies including 5G wireless devices, artificial intelligence software, autonomous vehicles and cryptocurrencies, she noted.

The bipartisan Chips and Science Act, which Congress approved in July, has a lot to do with driving innovation, Ms. Levin said. Among other measures, the bill provides nearly $53 billion in subsidies to build or expand semiconductor manufacturing plants, known as fabs, in the US.

Earlier this month

Intel Corp.

broke ground on a $20 billion semiconductor plant near Columbus, Ohio, with Intel Chief Executive Patrick Gelsinger joined by Ohio Gov. Mike DeWine, a Republican, and President Biden.

Speaking in Ohio, Mr. Biden said advanced technologies invented in America should be produced here, not shipped overseas, to reap the full economic benefits.

Mike Burns, a partner at venture and private equity firm Murray Hill Group, told the CIO Network event on Tuesday that when it comes to competing with China for leadership in technologies such as artificial intelligence or quantum computing, “it’s all about having semiconductors.”

“This is a strategic issue for national and economic security,” he said, adding that he was encouraged that U.S. lawmakers were open to defining industrial policy, particularly in the form of subsidies and tax breaks for U.S. manufacturers, measures that critics say risk distort markets. .

But in a capital-intensive industry like semiconductor manufacturing, where other countries have long supported private manufacturers, “it’s a problem that the U.S. isn’t involved,” Mr. Burns said.

Write Angus Lawten on angus.loten@wsj.com

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