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Michigan Is a Great Contender for Microchip, EV Investment

Some say that Michigan is well suited to become the hub for next-gen technologies like semiconductors and electric vehicles, but will need more investment before it outpaces tech hubs in New England and the West.

(TNS) — Michigan could gain investment for the development of semiconductors thanks to the global shortage of the tiny microchips wreaking havoc on the manufacturing of washing machines, consumer electronics and vehicles.

Michigan doesn't manufacture the microchips, but it does make critical components for them and is a leader in the development of its technology. Academic and corporate researchers are working to increase the number of chips that can be produced from silicon-based wafers and the functions each can perform. With the federal government proposing to allocate millions of dollars more to encourage domestic research and production, Michigan could be a strong contender for investment.

" Michigan has the upstream, has the downstream, has the great educational institutions and has a big pool of talented engineers," said Jianwei Dong, CEO of SK Siltron CSS, the U.S. subsidiary of the South Korean semiconductor manufacturer, of possible future investment in Michigan. "I say, 'Why not?'"

SK picked Monitor Township near Bay City for a $300 million investment to build a facility to manufacture silicon-carbide wafers from which chips can be made. SK says these wafers are up to 13 percent more efficient than regular silicon wafers and can handle a higher voltage and current, which is needed for the manufacturing of electric vehicles.

"These will be used in EVs to boost the range of the battery, to speed up the charging and better utilize electrical energies in various locations in EVs," Dong said. "This is where we come into play. Currently, there is short supply of these wafers and many companies are making this transition. We have to quickly expand to satisfy the entire needs of the industry."

How much more production is needed isn't currently clear, according to SK, but its current operations in Auburn have been working to increase production. Researchers there have increased the size of its wafers from 2 inches in diameter to 8 inches, allowing more chips to be produced from each wafer.

In 2020 alone, global semiconductor sales increased 6.5 percent when demand for consumer electronics rose as employees and students were sent home amid the COVID-19 pandemic, according to the Semiconductor Industry Association. There wasn't enough fabrication, and lead times of up to 26 weeks are the industry's norm to produce a finished chip, leading to the shortage plaguing the industry this year and likely well into 2022, according to experts.

'Strong Pipeline' in Mich.

The shortage only is encouraging the industry to find ways to produce more chips. California-based KLA Corp. in 2019 chose Michigan for its second headquarters from a starting list of 250 locations. KLA's inspection, metrology and data analytics seek to improve semiconductor manufacturing processes and improve yield. The artificial intelligence team in Ann Arbor uses machine learning to analyze data collected from semiconductor manufacturing. Its new campus in the city opens later this year for its more-than-300-person workforce, which it expects to grow to 600.

"So far, we have found that Michigan offers both a large population of trained engineering talent and strong pipeline of technical talent coming out of regional universities," said John McLaughlin, KLA's Ann Arbor site lead, in a statement.

That includes alumni from the Integrated Circuits Lab at the University of Michigan. The university produces more research on semiconductors than any other university, said David Blaauw, the lab's director. Its work can be found in iPhones, its startups are pushing toward future developments and its students have gone on to work at Apple Inc. and other tech firms in Silicon Valley, Boston and Austin, Texas.

" Michigan is increasingly growing as a destination for designers," Blaauw said. "We see more and more chip designers staying in the area."

Blaauw has witnessed the increasing complexity of semiconductors and the computations they conduct as digital photography on smartphones offer even more information for chips to process. In recent years, research has focused on not only increasing the number of chips that can be stamped from silicon wafers but specializations from facial recognition to decoding radio signals.

Now, he has several projects focused on increasing the ability of chips to perform more than one function — capability that Detroit's three automakers have said they are looking into amid the shortage that has halted assembly lines.

"We can make a chip that does this one computation really, really well, but then that chip is only good for that particular calculation," Blaauw said. "The problem is it is hard to do something that is efficient and be able to do many different kinds of things at the same time. How to cook many different recipes at the same time is much more difficult than just doing one thing really well."

The industry has been heading in that direction, Blaauw said — but the shortage is giving researchers "more impetus." Investment is needed, especially from the government, to hasten that progress, he added.

"Semiconductors are a very large segment of our life," he said. "They're in every car, phone, microwave and refrigerator. We do depend on it, and we need to make sure we have investment to keep that alive."

Shifting Dominance

The U.S. share of global manufacturing capacity eroded to 12 percent from 37 percent in 1990 as other countries incentivized investment, according to the Semiconductor Industry Association. Federal legislation to support domestic semiconductor research, design, and manufacturing provisions has passed, but it hasn't been funded. The quasi-governmental Michigan Economic Development Corp. is watching the situation closely, said Josh Hundt, chief business development officer.

"Because of our sound workforce, our expertise in research and development and our great business climate," he said, "we are poised to see these investments for both manufacturing and research and development take place here in Michigan."

But the manufacturing of semiconductors historically has centralized around tech hubs out West and in New England. Minnesota is the only Midwest state with chip "fabs," or manufacturing plants, according to the Semiconductor Industry Association.

These facilities require billions in investment, need large amounts of land and use enormous amounts of energy — similar reasons why Ford Motor Co. chose Tennessee and Kentucky for its new battery plants.

Chips fabs also need highly skilled hourly robotics and control technicians and electric engineers. Such skills are closer to those needed for the designing and production of electric vehicles, but those efforts at automakers typically don't go down to the chip level, said Mark Wakefield, global co-leader of the automotive and industrial practice at consulting firm AlixPartners LLP.

"The things that the Midwest has in terms of being able to scale to volume and quality control, they apply to a degree," he said. Compared to manufacturing chips, "building mechanical things is quite different. The skills aren't terribly transferable."

Currently, for every one job created at a Michigan semiconductor-related business, up to 2.2 additional jobs are added to the statewide economy, according to the MEDC, citing estimates from labor market analytics firm Emsi Inc.

That starts with Hemlock Semiconductors in Saginaw County, one of five manufacturers in the world that makes polysilicon used to create semiconductor wafers. The company hopes to take advantage of government incentives to contribute to advancements in analyzing the polysilicon's purity, said Phil Dembowski, chief commercial officer, in a statement.

Due to the small size of semiconductors, the polysilicon from which they are made must have impurities in the single-digit parts per trillion: "A part per trillion is like a grain of sand in 16 Olympic swimming pools," Dembowski said. "It is incredibly difficult to make things at a part per trillion level."

If the wafer has too many impurities, a chip made from it can fail. Hemlock receives roughly $1 billion in annual revenue from producing 30 to 35 tons of polysilicon, though some of it goes to making solar panels that don't require as high of purity as semiconductors. Even amid the semiconductor shortage, Hemlock has excess capacity.

"A chip might go through 200 to 300 steps in a chip fab," Dembowski said. "They put a lot of value into building that chip. In the end, if that doesn't work, that's a big loss for them."

Hemlock receives metallurgical silicon from North and South America that is 98.5 percent or higher pure. But even 1 percent of impurities from nickel and iron is 10 billion parts per trillion. Hemlock uses the Siemens process to make the silicon into a liquid, vaporize it, combine it with hydrogen and then decompose it to create rods that are harvested from reactors and packaged to be sent to wafer manufacturers.

The process takes two to three days and uses enormous amounts of energy that makes Hemlock the largest electricity user in Michigan, according to the company and Consumers Energy.

Efforts to continue to refine that process to limit impurities are ongoing but expensive. They involve growing crystals from samples or melting it into a liquid and using equipment to measure the impurities.

"We have to keep innovating to keep up," Dembowski said. " Michigan is key to the next-generation technology of both semiconductors and solar energy."

(c)2021 The Detroit News. Distributed by Tribune Content Agency, LLC.

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