How Semiconductor Leadership Could Boost US Solar Manufacturing

On August 9, 2022, the US federal government enacted the CHIPS and Science Act, which allocates $52 billion toward revitalizing domestic semiconductor manufacturing. The impact of this investment on US manufacturing may extend beyond just microchips.

Leveraging data from the newly released Clean Growth Tool, a free resource built by RMI and the Brookings Institution, we find that – in much the same way that semiconductors helped feed the Silicon Valley software revolution — the semiconductor manufacturing projects enabled by the CHIPS and Science Act could eventually bolster American solar competitiveness.

The Clean Growth Tool calculates the feasibility of different clean energy industries for different US regions by noting that if two industries historically concentrate in the same places, these industries must require similar local capabilities. That’s what we’re seeing with recent manufacturing investment in solar and semiconductors: projects are clustering in many common places.

To test this inference, we synthesized this investment data with the Clean Growth Tool’s feasibility index for solar energy components. This lets us see if solar and semiconductor manufacturing investments are flowing to regions with the underlying economic strengths that best suit solar manufacturing. The solar energy components technology category in our Clean Growth Tool includes an industry code that applies to both photovoltaic and semiconductor manufacturing, so the feasibility index is a useful proxy for both industries.

As we see, 53% of announced solar manufacturing investments and 70% of chip investments are going to areas scoring in the top 20% in solar components manufacturing feasibility nationwide. This high feasibility suggests that the solar energy components industry will thrive in the region, and solar and chip investments here will contribute to long-term economic benefits such as stronger local employment growth. To the extent that federal grant-making has considered local workforce and the industrial makeup of chip fabrication locations, this demonstrates a major success in the execution of industrial strategy.

We reinforce this finding with workforce data from the Clean Growth Tool. As we show below, even among regions with similarly high scores in our solar manufacturing feasibility index, there are differences in the area concentration of certain critical occupations in the pipeline — most notably, semiconductor processing technicians. The regions listed below with the highest concentrations of this occupation — Boise, Phoenix, and Portland — have all attracted major semiconductor manufacturing investments. Importantly, this workforce data is from 2022 — that’s before CHIPS and IRA kicked into high gear.

There are several reasons why it makes sense that solar and semiconductor manufacturing would overlap geographically, the most obvious reason being that the solar cells that make up panels are themselves semiconductors; siting plants where similar workforce and raw materials are already (or will soon be) in place makes economic sense.

But while semiconductor leadership is a path to solar manufacturing leadership, it is not the only one. The other input to the Solar Energy Components category in the Clean Growth Tool is the industry code for Custom Roll Forming. That includes the metal products that provide structure and support to photovoltaic devices. As such, regions with existing strengths in sheet metallurgy may also be well positioned to compete in solar manufacturing, given that the production of solar modules requires expertise beyond just semiconductors.

However, as semiconductor production enabled by the CHIPS and Science Act increases, the knock-on effects for US-made solar panels (essentially less complex semiconductors in themselves) could be monumental. The siting of solar facilities near advanced semiconductor plants could lead to shared innovation (and industrial equipment) that allow for greater efficiency and higher performance (chip-making equipment has previously been shown to double solar cell efficiency).

The history of industrial clusters driving innovation in the United States is cause for optimism: from the semiconductor-software relationship that drove Silicon Valley’s rise to the research-fueled biotech and pharmaceutical boom in Massachusetts, to the advanced adhesives and packaging industries in Minnesota, we know that regionality can drive destiny in complementary industries.

The authors thank Lachlan Carey, Rhea Cong, Nathan Iyer, and Colm Quinn for their contributions.