How AI works · chips

America tries to bring chips home

The US invented the chip. Today it makes about 1 in 8 of the world's chips. In 2022, it passed a law to change that. In 15 minutes, you learn why chips left, what the law does, and why it is slow.

Fabless: A company that designs chips but owns no factory. Like an author who writes a book and lets a printer print it.
Foundry: A factory that makes chips for other companies. TSMC is the most famous one.
Subsidy: Government money that helps pay for something. Here, it helps pay for chip factories.

01 · The question

Dinner again, and the hard question comes back

Your friend heard about the chip lesson. Now she asks: "The US invented the chip. Why does it need a law and billions of dollars to make chips at home?"

You use AI every day. You know chips are made in Taiwan. But you do not know why, or if the new law works.

After this lesson, you can answer in one minute. This lesson explains facts. It does not take a side.

First, a quick guess.

02 · Your guess

In 1990, the US had about 37% of the world's chip factory capacity. How much does it have now?

A wrong guess costs nothing. Guessing first helps you remember the answer. Pick one to open the next part of the lesson.

03 · The 6 steps

From a US lead to a US law, in 6 steps

Press Next step to see each step.

1The US leads

2Design pays more

3One shared factory

4The 2022 law

5TSMC in Arizona

6Slow and costly

04 · Remember

A law can pay for a factory. It cannot build the people and suppliers around it.

Chip making moved away over 30 years. Bringing it back takes money, workers and years, all at the same time.

A law helps with the first. The other two take longer.

US share of factory capacity, 1990 → 202237% → 12%

Money for factories in the 2022 law$39B

Skilled workers the US may lack by 203067,000

In the kitchen

A famous chef writes recipes and sells them. She closes her kitchen because renting one is cheaper. Ten years later she wants her kitchen back. The stove is easy to buy. The cooks and the farm suppliers took years to find.

Why is a new US chip factory slow and costly?

Money. TSMC plans more than $65 billion for three Arizona factories. That is over $20 billion each on average. The law gives $39 billion for factories across the whole country, and a grant often covers only 5% to 15% of a project.
People. The industry says it may be short 67,000 skilled workers by 2030. About 4 in 10 of those are technicians, who often have a 2-year degree.
Time and neighbors. From 2010 to 2020, US factories took about 2.5 years to build. In China and Taiwan, about 1.8 years. Chip makers also like to sit close to their suppliers, and those clusters were in Asia.

Is this settled?

No. People disagree about the best tool. Some want more subsidies. Some prefer lower taxes or open trade. This lesson shows the facts and does not pick a side. TSMC says the first Arizona factory has made chips with good yield since late 2024.

05 · Two checks

Pass two checks to finish

A miss is fine. Each miss gives you a new case.

Check 1 of 2 · Which step is it?

06 · Tell a friend

Your one-minute answer at dinner

Say it in your own words. Here is a version you can use:

The one-minute version

"In 1990, the US had about 37% of the world's chip factories. By 2022, about 12%. US firms kept the design work and let others make the chips, because design paid more. TSMC in Taiwan made it easy by building one shared factory for everyone. In August 2022, the US passed the CHIPS and Science Act. It gives $39 billion for factories and $11 billion for research. TSMC is building three factories in Arizona. It is slow, because factories cost over $20 billion each, and the US may lack 67,000 skilled workers by 2030."

CHIPS Act	US law, signed 9 August 2022. $39B for factories, $11B for research.
Fabless	Designs chips, owns no factory. Nvidia and Apple are examples.
Foundry	Makes chips for others. TSMC is the main one.
TSMC Arizona	Three factories, over $65B planned, up to $6.6B from the law.
SIA	The US chip industry group. Source of the 37% and 67,000 numbers.

Try today: ask an AI "Where was the chip in my phone made?" Then check the answer on your phone maker's site.

This lesson explains how things work. It is not advice to buy or sell any stock, and it does not take a side in politics.

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