Chipping in: Critical minerals for semiconductor manufacturing in the U.S.

In recent light of strained supply chains and global geopolitical tension, the U.S. is making significant investments to establish semiconductor manufacturing capacity and domestic supply chains for critical mineral resources to reduce dependence on other countries. Semiconductor-related critical minerals have become increasingly important considering the rise in demand for final products using semiconductor chips. The CHIPS and Science Act, passed in 2022, serves as the largest U.S. policy mechanism to expand investment in this field and enhance domestic semiconductor manufacturing capacity. This review outlines the critical mineral resources required for semiconductors, their origin, and the degree of dependency the U.S. faces across semiconductor supply chains and manufacturing. In the long term, more comprehensive policy, coupled with significant investment to ramp up domestic critical mineral mining and recovery, could enable the U.S. to establish a stable domestic supply to better support semiconductor manufacturing.


HIGHLIGHTS
• Critical mineral supply chains for semiconductors are highly vulnerable, and the U.S. is dependent on foreign sources.
• Supply chain security concerns are compounded by risks of concentration and geopolitical tensions, as few countries control an outsized share of the mineral supply.
• Targeted investments prompted by the CHIPS and Science Act could help facilitate a transition to onshore supply chains and create domestic manufacturing capacity for semiconductors.
• In conjunction with ramping up investments to set up manufacturing capacity within the U.S., recycling and recovering semiconductor critical minerals from existing sources can contribute to additional domestic production.
In recent light of strained supply chains and global geopolitical tension, the U.S. is making significant investments to establish semiconductor manufacturing capacity and domestic supply chains for critical mineral resources to reduce dependence on other countries.Semiconductor-related critical minerals have become increasingly important considering the rise in demand for final products using semiconductor chips.The CHIPS and Science Act, passed in 2022, serves as the largest U.S. policy mechanism to expand investment in this field and enhance domestic semiconductor manufacturing capacity.This review outlines the critical mineral resources required for semiconductors, their origin, and the degree of dependency the U.S. faces across semiconductor supply chains and manufacturing.In the long term, more comprehensive policy, coupled with significant investment to ramp up domestic critical mineral mining and recovery, could enable the U.S. to establish a stable domestic supply to better support semiconductor manufacturing.
CHIPS Act) as a recent policy output of significance for the U.S. (3) to increase domestic semiconductor manufacturing as a result of the global critical mineral dialogue.Another objective of this article is to evaluate the current status of critical semiconductor minerals in the U.S., discuss the geopolitical landscape globally, and consider implications for the successful implementation of the CHIPS Act.The following sections will outline the critical minerals used in semiconductor manufacturing, describe critical minerals through the lens of U.S. policy and investment, and provide a landscape assessment of existing U.S. effort in building up localized semiconductor supply chains.Moreover, the following sections will address the current status of U.S. procurement and provide a closing summary on policy, investment, and their associated implications moving into the future.

Critical minerals through the lens of U.S. policy
In recognizing the importance of critical minerals and U.S. reliance on outside countries, President Trump signed Executive Order 13187 (4) in 2017, which directed the Secretary of the Interior to publish a list of critical minerals and to identify actions to reduce U.S. reliance on imports, assess progress toward developing critical minerals recycling methods and technologies, investigate alternatives to critical minerals, and improve national security by cementing trade relations with allies (4).In a follow-up directive by the Trump administration in 2020, Executive Order 13953 instructed federal agencies to develop specific plans to expand and improve mining technologies as well as the processing and manufacturing of critical minerals and materials within the U.S. (5).With the change in administration in 2021, the Biden administration issued Executive Order 14017, directing federal agencies to identify potential threats to the supply chain of critical minerals, strategic materials, and rare earth elements (REE) to mitigate and address potential threats (6).
The U.S. list of critical minerals is not static, and Section 7002 of the 2020 Energy Act (1) requires that the executive branch of government update the list every three years and that the USGS conduct domestic resource assessments of each critical mineral.Moreover, this legislation further states that the Secretary of the Interior, in consultation with relevant stakeholders, publish an "Annual Critical Minerals Outlook" with data and forecasts outlining mineral production, consumption, and recycling patterns [1].

Current status of semiconductor-related critical minerals in the U.S.
Tucked within the broader category of critical minerals are specific candidates that are essential for the manufacturing of semiconductors.Semiconductors control the flow of electric current in a device, and semiconductor chips are termed the "brain of modern electronics" [7].Semiconductors are essential components of electronic devices and crucial in the development of quantum computing, artificial intelligence, and other advanced technologies.Semiconductor manufacturing, also referred to as semiconductor device fabrication, is a multi-step process encompassing the creation of microchips and circuits-using a mix of critical minerals, materials, and chemicals-which are included in various end products such as smartphones and computers [8].Although U.S. companies account for 45-50% of global semiconductor sales [9], U.S. semiconductor manufacturing capacity has reduced from 37% in 1990 to a mere 12% in 2021 [7].Moreover, the manufacturing of advanced semiconductors used in consumer electronics and information communications technologies has become concentrated in Taiwan [10], and a large quantity of supply chains linked to critical mineral for semiconductors have become concentrated and connected to other global giants, including China and Russia [7].
Semiconductor manufacturing and fabrication involves both critical minerals and non-critical materials across its various stages, which include doping (the process of adding impurities to pure materials to alter their properties), metal development for interconnects, insulator development for isolation, and chemical processes for cleaning and etching (eliminating undesired substances from the surface of the semiconductor chip) [11].The finite nature of most of these metals, with the exception of silicon, and their unstable supply make them both scarce and extremely valuable.Arsenic, palladium, gallium, scandium, cobalt, titanium, and several REEs have been categorized as critical minerals by the USGS and contribute to the production and manufacturing of semiconductors.The two most frequently used non-critical materials are silicon and gallium arsenide (GaAs) [8].
Outlined below are the critical minerals and materials required to manufacture semiconductor chips and their current status in U.S. domestic manufacturing.Note that while many of the chemicals and gases listed below, which include flourite, hydrogen fluoride, phosphorus, and noble gases, do not serve as bottlenecks to manufacturing, this paper aims to provide a more exhaustive picture of what is included in the process.
Arsenic: High-purity arsenic metal is used to produce GaAs, indium-arsenide, and indium-gallium-arsenide semiconductors that are used in biomedical, communications, computer, electronics, and photovoltaic applications [12].The U.S. has not produced arsenic domestically since 1985 and most of it is imported from China (97%) along with smaller quantities from Peru and Morocco [12].
Cobalt: Cobalt is used in semiconductor chips in conjunction with copper [13].The U.S. has one cobalt mine and recovers some of the metal through recycling, accounting for 24% of domestic consumption.The DRC is the world's leading source for cobalt, supplying approximately 70% of mined cobalt [14].With the exception of Morocco and artisanally mined cobalt in the DRC, most cobalt is mined as a byproduct of copper or nickel [15].China is the world's leading processor and consumer of refined cobalt, produced from partially refined cobalt imported from the DRC [15].The U.S. imports the majority of its cobalt from Norway (22%), Finland (12%), Canada (16%), Japan (12%), and other nations [16,17].
Gallium arsenide: Gallium arsenide helps conduct electrons in semiconductor chips.It is not produced in the U.S.More than 95% of gallium consumed in the U.S. is in the form of GaAs [18].The U.S. imports high purity gallium and GaAs for use in semiconductors from countries including China (53%), Germany (13%), Japan (13%), and Ukraine (5%) [18].

Rare earth elements (REE):
REEs consist of 17 metals and are essential in the manufacturing and functioning of semiconductors in communications and defense applications [21].The U.S. has REE deposits and mines them domestically, currently producing about 10% of the world's REE.China supplies over 60% of the world's demand.Between 2017 and 2020, REEs were imported from China (78%), Estonia (6%), Malaysia (5%), and Japan (4%) [22].
Scandium: Scandium is used for its electronic properties in semiconductors.Scandium is neither mined nor recovered from mining byproducts in the U.S. According to the USGS, no definite production data exists but the metal is imported from economies including the European Union (EU), China, Japan, and the Philippines [23].
Silicon: Silicon is the most economically important mineral for semiconductor manufacturing.Even though silicon is the second most abundant element on earth after oxygen, in nature it is bound to oxygen, aluminum, and magnesium, so refining is required to extract silicon metal.The silicon wafers used in semiconductors require an ultra-pure single-crystal structure, so after extraction, it must be refined through various processes.China is the dominant producer of silicon (70% of the market) with Russia in second place (7%) [24].The U.S. does produce a small portion of silicon wafers domestically across six primary facilities [25].
Titanium: Titanium is used as a barrier metal in semiconductors to enable flow of electrical signals within the fabricated device [26].Titanium domestic production data is withheld by the USGS due to security concerns, but the metal is largely imported from Japan (88%), Kazakhstan (8%), and Ukraine (3%) [27].
The next few materials do not belong to the USGS list of critical minerals, but are given as examples to illustrate the diversity of specialty chemicals and compounds (of which there are many) used in semiconductor manufacturing.Several of these are manufactured in other countries and the U.S. is reliant on foreign sources.
Fluorite and its derivatives: Fluorite (used to produce fluorine gas) is used for etching and cleaning processes in semiconductor manufacturing.China is the highest producer, followed by Mexico, South Africa, Mongolia, Vietnam, and Spain [28].
Hydrogen fluoride: Hydrogen fluoride (HF) is used in the etching and cleaning steps in semiconductor manufacturing [29].The U.S. is the largest importer of HF in the world, signaling that not enough is produced in the country to meet its demands [30].China is the largest exporter of HF, followed by Germany [31].
Noble gases: Noble (or rare) gases (neon, argon, and krypton) play several roles in semiconductor manufacturing like use in high pressure lasers to process patterns in semiconductor integrated circuits [32].Russia and Ukraine are the main producers of rare gases used in semiconductor manufacturing [33].Ukraine is the world's largest supplier of noble gases, supplying about 90% of the high purity neon gas and 40% of krypton gas used in U.S. industry for chip manufacturing [34].
Phosphorus and its derivatives: High-purity phosphoric acid is used for surface treatment in the etching process during semiconductor manufacturing [35].Manufacturers in the U.S., Germany, and Japan account for a majority of worldwide production of liquid chemicals used in semiconductors [36].
Semiconductor chip manufacturing: Semiconductor chip manufacturing across its stages is extremely complex and globally dispersed.The semiconductor manufacturing and assembly hub is largely concentrated in East Asia.Taiwan, China, and South Korea control over 80% of the global supply [37,38], and smaller hubs exist in Japan, the EU, and the U.S. Taiwan Semiconductor Manufacturing Company (TSMC)-the world's largest maker of advanced chips-produces over half of the world's semiconductor chips [39].The emergence of East Asian countries as semiconductor powerhouses, and their outpacing the U.S., is not accidental.Government policies, tax credits and incentives, and cheap labor have cumulatively played a significant role in developing their semiconductor manufacturing industries [9].Moreover, these countries benefit from the cluster effects that favor capacity building within existing manufacturing hubs, and thus, are able to expand technological know-how and production while maintaining dominance over the global market [9].

Current U.S. investments in semiconductors
In addition to the changes in the semiconductor supply chain landscape that come with geopolitical challenges, the sheer increase in the demand for semiconductors has resulted in a global chip shortage especially affecting the global auto industry, decreasing production by 26% [40].During the pandemic, final goods that depended on semiconductors experienced a steeper price increase than those that did not use semiconductors [41].The White House reported that the chip shortage exposed long-term risks in the U.S. semiconductor supply chain, including gaps in the workforce, non-transparent supplier networks, and potential bottlenecks impacting availability of manufactured chips [2].The shortage also impacted a number of final goods, including electric vehicles and car batteries, prompting the U.S. to develop policies to strengthen domestic semiconductor production and reduce dependency on outside economies.
The CHIPS Act, signed into law by President Biden in 2022, is the single largest U.S. investment towards semiconductor spending to boost research, manufacturing, STEM workforce development, and production across essential industries like automobiles, household appliances, and defense systems (3).However, prior legislation had also included provisions to grow critical minerals capacity for a variety of end uses.As of 2023, the Energy Act of 2020 (1), the 2021 Infrastructure Investment and Jobs Act (IIJA) (7), and the Inflation Reduction Act (IRA) (8) have funded more than $8.5 billion in activities and research related to critical minerals.For instance, the IIJA directed a total of $407 million for critical minerals extraction, pilot projects for processing, and mining and recycling research (7).The IRA in particular has provided tax incentives across critical mineral supply chains, with one of its focuses on electric car batteries procured from the U.S. or from countries with shared free-trade agreements (8).There are also numerous bills that have been introduced in the current 118th Congress which can be integrated into omnibus spending packages like the National Defense Authorization Act (NDAA) and Appropriations Act to become law in the future.
Regarding CHIPS Act funding, it will direct $280 billion over the next ten years towards semiconductor research, manufacturing, and commercialization within the U.S. [42], and recent investments are depicted in Figure 1 [43].The law also brings together several government agencies-The Department of Commerce, State, Defense, Interior, U.S. Agency for International Development, and National Science Foundation to name a few-to facilitate roll-out, implement funding mechanisms and programs, and maintain oversight.Around $52.7 billion of the total has been allocated for semiconductor manufacturing and workforce development, expanding economic opportunities for individuals and creating a highly skilled pool of workers.Another $24 billion has been allocated through tax credits for microchip production (3).It has also allocated $39 billion for semiconductor incentives (3).These incentives will target building, expanding, and modernizing facilities for fabrication of next-generation semiconductor chips, including those used in automobiles and defense systems, and $500 million has been directed towards strengthening global supply chains [42].Some of the other key provisions of the CHIPS Act include the establishment of a National Semiconductor Technology Center that will conduct research on the design of advanced semiconductor technologies to develop domestic capacity (3).Furthermore, this bill establishes the National Advanced Packaging Manufacturing Program, which will conduct advanced semiconductor testing and bolster assembly and packaging capability in the U.S. (3).
A large part of the CHIPS Act funding, the $39 billion mentioned previously, is earmarked for the construction of semiconductor fabrication plants in the U.S. (and restricts recipients from expanding semiconductor manufacturing in China and other countries), which serves as a critical step in ensuring domestic manufacturing (3).In tandem with the CHIPS Act funding, many private firms like Intel and TSMC have made investments in the semiconductor manufacturing sector in the U.S. [44] (Figure 1).TSMC has recently  b) categories (*for some projects the investment data is not available and thus has not been reported in the grand total).Image and data for table were used with permission from [43].
announced expansion of its operations in Arizona, increasing its investment in the state from $12 billion to $40 billion.Micron has announced a $40 billion investment in chip manufacturing within the U.S., and other companies like Qualcomm and GlobalFoundries have announced a new partnership that includes $4.2 billion for chip manufacturing [2].The law offers broad financial assistance for entities that provide materials in the semiconductor supply chain, but whether this provision will include critical mineral projects depends on how federal agencies interpret and implement this law.

Why are semiconductor critical mineral supply chains so concentrated?
The geographic location of mineral deposits plays a crucial role in supply chains.For example, the majority of cobalt deposits are located in the DRC [45], Australia and Chile control roughly 70% of global lithium extraction [46], and Indonesia holds more than 30% of the global share in nickel [47].These mined critical minerals are then sold to facilities in outside countries where they are refined and processed as shown in Figure 2 [48].Due to the high concentration of midstream and downstream manufacturing operations in Eastern Asia, the respective supply chains of a mineral also become concentrated.A good example of this is China, who is the leading player in refining minerals like cobalt and REEs, despite not mining these minerals in significant quantities domestically [49].Regardless of where the upstream mines are, China owns or finances several of them (e.g., cobalt, lithium).Moreover, it also controls much of the mineral processing because of its existing infrastructure, trained workforce, access to technology, and strategic investments in mining operations upstream.As of 2021, China owned or financed fifteen of the nineteen cobalt mines in the DRC [50].Along with cheap labor, China's domestic policies, like using coal to support these energy-intensive and often polluting industries, have helped shape its supply chain dominance.
As of 2019, the U.S. is 80% dependent on China as an importer of critical minerals [52].To have the majority of semiconductor minerals consolidated under a single country's control poses significant challenges.To have them consolidated under specifically China's control, given geopolitical tensions and trade disputes with the U.S., poses even greater challenges.China exercises considerable influence over supply chains-for example, it placed a ban on REE exports to Japan in 2010 [55].Strategically, it seeks to maintain its dominance, specifically over REEs through its recent merger of all the major domestic suppliers of REEs [56].More recently in 2023, China announced export restrictions on gallium and germanium, two critical semiconductor-related minerals, directly exemplifying the geopolitical risks of the current supply chain [57].While long-term impacts are difficult to assess, in the short-term, this announcement increased the price of these minerals [58], signaling that China is further strengthening its dominance over critical materials, which is likely to continue over the coming decades.
The aforementioned statistics in the previous section, coupled with U.S. government assessments and findings on semiconductor supply chains, have all pointed to a U.S. over-reliance on foreign sources for critical minerals.Prompted by the President's executive orders, several initiatives outside of the CHIPS Act have been undertaken by the Biden administration and the private sector in revitalizing the U.S. position [2,59].For example, agencies including the Department of Defense, Department of Energy (DOE), and Department of State are coordinating efforts to stockpile critical minerals in the country, many of which are essential raw materials for semiconductor manufacturing.The DOE is launching a $140 million demonstration project to recover REEs and critical minerals from mine waste like coal ash, reducing the need to establish new mines.Major companies are also making investments in expanding current extraction operations, exploring untapped sources, and expanding recycling technologies to reuse critical minerals in the supply chain.For example, Redwood Materials, in partnership with Ford and Volvo, is designing a pilot project to collect end-of-life lithium-ion batteries to extract lithium, cobalt, nickel, and graphite [60].Tesla is partnering with Talon Metals to source high-grade nickel for car batteries in Minnesota [2].Research and innovation efforts are also underway to identify alternative materials that can replace critical minerals and be produced or mined more sustainably [61,62].
When considering supply chain development for semiconductor materials in the U.S., one critical aspect to take into account is mining for minerals.The ethics surrounding environmental and equity concerns run high in mining, especially when most deposits lie within or adjacent to protected areas, such as tribal land, and fragile landscapes can displace communities.The CHIPS Act does not target specific critical minerals but provides an overall framework from multiple dimensions for the U.S. to become self-reliant in the semiconductor space.It has called to establish a new Critical Materials Subcommittee under the National Science and Technology Council aimed at coordinating federal government efforts on critical material research and development in an environmentally responsible manner (3).The Council is also tasked with addressing sustainable mineral extraction and processing, developing a critical mineral workforce, and coordinating mineral recycling and substitution efforts within the U.S. (3).The future mining of critical minerals must ensure that sustainable extraction practices and modern technology are used, minimizing damage that is inflicted on the environment.Strategies could include funding opportunities for innovative technologies that help develop cleaner mining techniques, enhance raw material recovery, and improve recycling technologies.
The U.S. and its allies are implementing various policies to ensure a single country does not control the majority of critical mineral supply chains.In coordination with key international allies, the Minerals Security Partnership (MSP) has been convened to ensure that critical minerals are produced, processed, and recycled in a manner that supports strong global standards [63].The MSP will help catalyze investment from governments and the private sector for strategic opportunities-across the full value chain-that adhere to the highest environmental, social, and governance standards [63].In a recent 2023 meeting of the G7 economies (consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the U.S) and the EU (which is not a member but participates fully), leaders agreed to a 'Critical Mineral Plan' that will enable countries to transition more rapidly to clean energy [64].As a part of this plan, these countries will develop more robust predictions around longand short-term supply and demand of critical minerals.Furthermore, they plan to cooperate in developing new mines and supply chains to support the recovery of critical minerals as competition increases as well as to promote the recycling of critical minerals globally [64].

Conclusion:
Where is the U.S. headed?
The U.S. currently does not produce enough critical minerals nor semiconductors, and it is evident that the U.S. is dependent on other foreign sources, especially East Asian countries, to source fabricated semiconductor chips.Both the government and the private sector alike have indicated plans to expand the recovery and production of these minerals in the decades to come [44].Establishing enhanced recycling techniques to better recover critical minerals from existing products would also contribute to building domestic reserves while representing further potential to enhance domestic supply, especially given geographic location of deposits and midstream operations are dispersed globally.
As mentioned previously, the CHIPS Act is a framework, and several federal agencies are operating under this unified framework to develop strategies and implement portions of the legislation.The CHIPS Act is an important step forward for the U.S., but there were many potential gaps that existed in the legislation that federal agencies are starting to address [65].Moreover, there was an initial lack of measurable targets within the legislation that the U.S. will need to achieve in terms of concrete percentages of global capacity, which are now being addressed.For example, the Department of Commerce has released multiple strategy documents with tangible targets [66]; the White House has also released a plan to adapt (or pivot) in case of future crises that might affect the semiconductor supply chain [67].
A recent report has shown that major research agency appropriation budgets for fiscal years 2023 and 2024 are short by an overall 20% to fulfill CHIPS Act authorizations, signaling that the U.S. is not on par to deliver on promised investments [68].As investments and initiatives funded by the CHIPS Act ramp up, in the interim period, the U.S. will need to rely on foreign sources and its allies for critical semiconductor minerals.It is important to note that because supply chains are complex and globalized in nature, it is perhaps impossible to replace all foreign sources with domestic suppliers [69].In the meantime, other countries are also strengthening their critical mineral supply chains [70].For example, South Korea intends to double its critical metal stockpiles and is funding research, offering tax incentives to critical metal companies, and subsidizing nearly 40% of some mining costs for tungsten [71].
Outdated regulatory requirements in the U.S. make it costly and time consuming to secure permits required to establish mining and refining operations, often spanning decades [72].As a result, U.S. critical mineral supply chain security policies that aim to increase domestic mining and refining capacity must contend with U.S. environmental protection and regulatory policies.To apply the CHIPS Act framework more holistically towards critical minerals, in addition to updating these regulations, the government could establish tax credits and subsidies for mining and refining operations.Congress and the federal government can also facilitate frameworks that increase critical mineral supply chain coordination with key allies and partners globally, and broker bilateral and multilateral trade agreements among countries to de-concentrate critical mineral supply chains [73].The U.S. and strategic allies could also work together to establish a set of clearly defined environmental, social, and governance standards for the production and processing of critical minerals [73].
Current investments and policies like the CHIPS Act are a crucial step in the right direction, but in a rapidly altering global landscape, it remains unclear whether the scale of investments aligns with the scale of the global challenge.

Figure 1 :
Figure 1: Semiconductor supply chain manufacturing investments announced from May 2020 to May 2023 across (a) investment made by the top 10 companies, (b) categories (*for some projects the investment data is not available and thus has not been reported in the grand total).Image and data for table were used with permission from[43].

Figure 2 :
Figure 2: Different stages of operations in the supply chain of semiconductors.Reproduced from the U.S. Department of Energy [48].