High-tech Industrial (semiconductor and batteries)
Sections: Overview Project activity Key considerations
High-tech Industrial (semiconductor and batteries)
Sections: Overview Project activity Key considerations
Geopolitical tensions are creating short-term uncertainty in the North American high-tech industrial sector. Despite these challenges, continued investment by industry leaders points to a positive long-term outlook.
Greg Forcum Associate Director, Americas
Overview
The North American high-tech industrial sector, particularly semiconductor and battery manufacturing, has rapidly expanded in recent years, driven by the CHIPS and Science Act and the Inflation Reduction Act (IRA).
These initiatives sparked a significant wave of investment in semiconductors and clean energy manufacturing. The Semiconductor Industry Association (SIA) projects that US semiconductor manufacturing capacity will grow by 203% from 2022 to 2032, the largest increase globally.¹
Battery manufacturing has also surged, becoming the leading driver of clean tech investment in the US, making up 69% of all new manufacturing projects, following the enactment of the IRA.² According to the Clean Investment Monitor, total battery cell and module capacity is expected to meet and possibly exceed domestic demand through 2035.2 Although some projects were recently put on hold, with some slated to restart in late 2027, the overall trend remains positive. Despite some policy changes and market fluctuations, industry leaders are continuing to expand, which points to long-term confidence.
In Canada, federal funding has supported the growth of the battery sector. While some projects face delays or restructuring due to decreased demand for electric vehicles, key flagship initiatives are still progressing. As of the first half of 2025, the sector continues to show strong momentum, although with a more cautious approach. Companies are closely monitoring potential shifts in US federal policy and responding to increased market volatility, including evolving trade tariffs and global supply chain uncertainties.
Project activity
Strong momentum in the battery manufacturing sector is tempered by shifting dynamics
US battery manufacturing capacity is projected to reach 1,083 GWh annually by 2028, which is enough to power about 12.1 million electric vehicles (EVs) each year.3 According to the Environmental Defense Fund (EDF), since the IRA's passage in August 2022, the US has attracted US$129 bn in EV-related investments, representing 65% of all EV investments since 2015.3 A total of 229 projects have been announced since 2015, with 69% already under construction or operational. Notably, 166 of these projects were announced after the IRA was enacted, and most are concentrated in 10 states, particularly Georgia, Michigan, and North Carolina, which together account for over a third of the total investment.³
Due to funding uncertainties, some project cancellations and closures among smaller companies have been reported, though the broader impact is still being assessed.
In Canada, a 2024 Bloomberg report indicates the country leads in the global lithium-ion battery supply chain, with many new battery manufacturing projects announced recently.⁴ However, several major projects have recently been put on hold or canceled due to a slowdown in EV sales and inadequate infrastructure, which are hindering Canada's transition to electric mobility. Additionally, since many Canadian EVs and auto parts are exported to the US, tariffs are adding further uncertainty. Despite these challenges, there are still battery manufacturing projects worth US$14 bn in the pipeline as of Q1 2025.⁵
Enhanced focus on fab construction in the US and R&D in Canada
According to ‘Semiconductor Equipment and Materials International’ (SEMI), four new fabs are expected to begin construction in the US in 2025.¹
Since 2020, the US semiconductor sector has seen over US$540bn in investments across more than 100 projects in 28 states, largely driven by the CHIPS Act. Approximately 95% of CHIPS Act funding has been allocated into semiconductor fabrication. Most investments are directed toward established hubs like Arizona, California, New York, and Texas, but there is also notable activity in emerging areas such as New Albany, Ohio.¹ ⁶
While Canada is a leading player in battery manufacturing, it has a smaller footprint in semiconductors. However, it is enhancing its capabilities through robust research and development (R&D) partnerships between the government and the private sector, particularly in Quebec, where new R&D, advanced packaging, and chip assembly capabilities are being developed.⁷
Key considerations
01
Policy related uncertainties
The uncertainty surrounding the future of incentives and funding from the previous administration poses a significant risk for high-tech industrial construction in the US. Although considerable funding has been allocated, unclear guidelines on how it will be disbursed continue to affect decision-making. As the US ‘Economic Policy Uncertainty Index’ reached 296 in March 2025, the highest since the pandemic, investor confidence has weakened.⁸
As a result, many companies are adopting a cautious approach to capital expenditures, leading to changing risk profiles and unclear financial returns, which delay project execution and reduce investment interest.
02
Supply chain complexity
Geopolitical tensions, trade barriers, and export controls are disrupting the semiconductor and battery supply chains. Fluctuating commodity prices and rising tariffs are straining material availability and increasing construction costs for new facilities. In response, companies are actively collaborating with suppliers and customers to develop mitigation strategies and explore alternatives for affected materials.⁹
03
Delays in construction timelines
Increased activity from the IRA and CHIPS Act incentives has led to intense competition for limited resources such as contractors and skilled labor, which is affecting construction timelines and capacity. While potential policy changes could impact projects that have not yet begun, those already in progress face significant execution challenges. Labor shortages, rising soft costs, and difficulties in retaining skilled workers during construction pauses are increasing costs. Additionally, geopolitical tensions and tariffs are putting further strain on already stressed supply chains.
On the demand side, rapidly evolving technologies such as AI-driven chip requirements and the transition to solid-state batteries, are reshaping project scopes. This requires greater design flexibility and often leads to mid-project redesigns or delays. However, efforts are being made to shorten manufacturing timelines. For example, in semiconductor projects, advancements like Intel’s 18A EUV lithography are enabling a more adaptable design process that aligns construction with technological changes.⁷
04
Availability of skilled resources
The SIA reports that labor shortages are a major obstacle to meeting rapid capacity expansion goals. They estimate that of the over 100,000 new manufacturing and design jobs expected by 2030, about 67,000 may go unfilled.¹ According to a Deloitte survey, 80% of US graduates with a master’s degree in semiconductor-related fields do not remain in the country after graduation.¹⁰
05
Contractor constraints and labor shortages
General contractors are increasingly overwhelmed by overlapping large-scale projects, leading to longer construction timelines and increased costs. Demand has outpaced the number of experienced contractors, especially in key regions. The Associated Builders and Contractors (ABC) report that over 75% of contractors are struggling to fill both hourly and salaried positions. In response, 53% of contractors raised base pay rates in 2024 to stay competitive, a higher increase than in 2023.¹¹ To address labor challenges, many are turning to prefabrication and modular construction techniques.
Sources
- America Projected to Triple Semiconductor Manufacturing Capacity by 2032, the Largest Rate of Growth in the World, Semiconductor Industry Association, May 08, 2024
- The State of US Clean Energy Supply Chains in 2025, The Clean Investment Monitor, April 24, 2025
- Production Underway at Dozens of U.S. Electric Vehicle Manufacturing Sites after Historic Levels of Investment, Environmental Defense Fund, January 08, 2025
- China Drops to Second in BloombergNEF’s Global Lithium-Ion Battery Supply Chain Ranking as Canada Comes Out on Top, BloombergNEF (BNEF), February 05, 2024
- Global Data
- Innovation Lightbulb: Tracking CHIPS Act Incentives, Center for Strategic & International Studies, April 25, 2025
- IBM signs agreement with Canadian government to shore up country’s semiconductor industry, Data Centre Dynamics Ltd (DCD), April 29, 2024
- Economic Policy Uncertainty Index for United States, Federal Reserve Bank of St. Louis, April 03, 2025
- The Semiconductor Industry Grapples with Growing Complexity, Gartner, Inc., March 04, 2025
- 2025 global semiconductor industry outlook, Deloitte, February 04, 2025
- 2025 Construction Outlook National Survey Results, The Associated General Contractors (AGC) of America, Inc.
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