CHIPS Act Projects Delayed While GaN Chips Set to Surge

The semiconductor industry is at a crossroads. On one side, the ambitious CHIPS and Science Act has faced significant delays, with over 40% of planned projects stalled due to labor shortages, policy ambiguities, and market slowdowns. On the other hand, a technological breakthrough is rapidly gaining momentum: gallium nitride (GaN) chips. As the demand for AI and high-performance computing grows, GaN chips are emerging as a critical solution for the next era of computing.??

CHIPS Act Delays: A Slower Road to U.S. Semiconductor Expansion?

The CHIPS Act was supposed to bring the semiconductor industry back to the U.S., addressing global supply chain vulnerabilities. Yet, despite the Act’s bold vision, the reality on the ground has been one of significant setbacks. Major players like TSMC, Intel, and Samsung have encountered unexpected roadblocks that have delayed their U.S. projects:?

• TSMC: The opening of its second fab in Arizona has been delayed by two years. Contributing factors include a scarcity of skilled labor and operational challenges related to cultural differences with local vendors.
• Intel: Construction of its Ohio facility has been halted. The company cites market downturns and delays in securing federal subsidies as primary reasons.
• Samsung: The Texas plant has postponed full-scale commercial production of 4nm chips. Strategically, Samsung is shifting focus to advancing 2nm technology by 2026, potentially positioning the U.S. with a more advanced semiconductor supply chain in the long term.

Regulatory complexities have compounded these issues. The approval process for CHIPS Act funding and ambiguous regulations under the Inflation Reduction Act (IRA) have introduced financial uncertainties.? Such uncertainties force financial pressure on production by compelling the semiconductor service providers to delay or slow their schedule.

The GaN Revolution: Powering the Future of AI

While the CHIPS Act has struggled to gain traction, another technological wave is quietly but rapidly rising: GaN chips. As AI applications become more sophisticated, the demand for higher efficiency and better power management has exploded. Traditional silicon-based chips are not up to the task, especially in environments like data centers, where high power density and heat generation are constant challenges.?

GaN chips, on the other hand, excel in these conditions. Known for their superior thermal performance and energy efficiency, GaN chips are quickly becoming indispensable in high-performance computing environments. AI workloads involving CPUs and GPUs generate significant heat, often limiting their efficiency. GaN chips solve this problem by operating effectively at higher temperatures, reducing the need for complex and costly cooling systems.

The GaN market is now on the verge of explosive growth. Projections suggest a compound annual growth rate (CAGR) of 50% through 2030, with the global market set to expand from $271 million in 2023 to over $4 billion by the decade’s end. Companies like Infineon and Texas Instruments are investing heavily in GaN technology, recognizing its potential to reshape industries ranging from AI to electric vehicles and data centers.

A Closer Look at GaN's Market Growth?

The chart below further underscores GaN’s growth potential. The global GaN semiconductor devices market was valued at $2.67 billion in 2022 and is expected to surge to a staggering $26.83 billion by 2032. This upward trajectory illustrates the rapid adoption of GaN chips across a range of industries.

GaN Semiconductor Market Growth

As seen in the graph, the GaN market is set to experience a decade of steady, exponential growth. Between 2023 and 2024, the market is expected to grow by more than 50%, from $3.35 billion to $4.21 billion. This rapid rise reflects the increasing demand from sectors like AI and electric vehicles, which are pushing the limits of traditional semiconductor technology. By 2032, the market is forecast to reach nearly $27 billion, reinforcing the critical role GaN will play in the future of high-performance computing, AI applications, and beyond.

Expanding Applications of GaN Technology

Beyond consumer electronics, GaN technology is making significant inroads into sectors such as automotive, renewable energy, and industrial motor drives. By 2030, these non-consumer applications are expected to comprise nearly 48% of the GaN market. Key developments include:

• Electric Vehicles (EVs): GaN devices enable more efficient onboard chargers and traction inverters, leading to faster charging times and increased driving ranges. Companies like Renesas Electronics are integrating GaN solutions into automotive power systems, addressing the demand for higher efficiency and reduced thermal footprint.
• Data Centers: The shift towards GaN-based power supplies and converters enhances energy efficiency and reduces cooling requirements. Semiconductor companies are developing GaN-based power modules that support higher power densities and improved thermal management, crucial for handling intensive computational loads in AI and machine learning applications.

GaN Chips: A Critical Tool for the Future of AI and Computing

As AI applications continue to push the limits of computing power, the shortcomings of traditional silicon chips are becoming increasingly clear. High-performance computing environments, particularly those involved in AI, demand components that can handle extreme power densities and high operating temperatures. This is where GaN chips are proving invaluable.

GaN's ability to operate at higher temperatures without sacrificing efficiency makes it a game-changer for AI and data centers. With more complex AI models requiring vast amounts of computational power, GaN chips are stepping in to meet the challenge, helping data centers manage both heat and energy consumption. Infineon’s roadmap, for example, outlines a future where GaN plays a central role in AI-driven applications, positioning the technology as a vital part of the next generation of computing infrastructure.

Tessolve: Driving GaN Innovation

As GaN technology gains momentum, companies like Tessolve are at the forefront of driving semiconductor innovation. Tessolve, a leader in semiconductor engineering solutions, plays a key role in the design, validation, and testing of GaN chips for AI, automotive, and other high-performance applications.

Tessolve’s expertise in post-silicon validation and chip design is directly aligned with the growing demand for efficient, high-performing GaN chips. By helping companies integrate GaN into their products, Tessolve is enabling the next wave of semiconductor innovation, ensuring that GaN chips can meet the rigorous demands of industries pushing the limits of power and efficiency.

Navigating a New Era in Semiconductor Technology

Although the CHIPS Act is significantly delayed in the U.S. and typically affects semiconductor engineering and manufacturing projects negatively, GaN chips themselves become the technological imperative for the rapidly growing future of AI and advanced computing. Their superior energy efficiency and ability to handle extreme conditions position them as a key component in the future of these industries.

For semiconductor companies, the message is clear: invest in technologies like GaN or risk falling behind in a rapidly evolving market. As GaN chips continue to unlock new possibilities across sectors, the future of semiconductor innovation is bright, and companies like Tessolve are playing a crucial role in driving the industry forward. GaN isn’t just a stop-gap solution; it’s the foundation of tomorrow’s computing landscape.