Mid-Size Chip Manufacturing Facilities in the AI Era

Speed and Resiliency Still Rule

Key Takeaways:

Speed-to-market remains the key driver of small-to-mid-size chip manufacturing facilities projects, with companies under pressure to outpace competitors and meet CHIPS Act funding deadlines.
Global energy price volatility and supply chain issues are forcing chip fabrication plant (fab) owners to double down on resiliency strategies during design and construction.

While less contentious than data center projects, chip fabs face community pushback and permitting challenges that can slow down project schedules.

Owners must prioritize adaptability when planning their chip fab facilities, so that operations can shift to accommodate new technologies.

As the AI boom and CHIPS Act subsidies fuel demand for faster, more powerful chips, the U.S. semiconductor market is expected to reach about $191.5 billion by 2030, up roughly 35% from 2025, according to Mordor Intelligence.

While headlines tend to focus on mega fabs—vast, multibillion dollar semiconductor manufacturing campuses designed to churn out chips at enormous scale—much of today’s innovation is happening in mid-size chip manufacturing facilities that support R&D, pilot lines, legacy nodes, and specialized production.

Mid-size fabs are as technically complex as their larger counterparts. Moreover, their owners tend to operate under tighter budgets, compressed schedules, and rapidly shifting market forces. To understand how clients can position their facilities for long-term success, we sat down with Dana Watts, SMMA’s Senior Technology Architect, who has been designing semiconductor and cleanroom facilities for over 40 years.

Q: Dana, what’s driving the boom in U.S. semiconductor manufacturing right now?

A: The CHIPS Act is a major factor. It was a response to supply chain challenges that became very clear during COVID—specifically, that many of the chips we rely on were no longer being manufactured domestically at the levels our industries need.

In 2022, the federal government introduced funding to support semiconductor construction and workforce development, with the goal of bringing that capability back to the U.S. That has reduced reliance on overseas manufacturing and created a strong pipeline of projects.

At the same time, demand for faster, more powerful chips continues to increase due to AI. Moore’s Law is becoming even more accelerated. But the underlying pressure has always been there—it’s just more visible now.

Q: How do mid-size semiconductor facilities differ from the mega fabs that dominate the news cycle?

A: The core technology is the same, but the difference is the purpose the facility serves. Mid-scale fabs tend to support more specialized applications—pilot lines, targeted manufacturing, controlled environments. They still require sophisticated cleanrooms and infrastructure, but they’re designed around precision and adaptability rather than sheer production capacity.

In many cases, these facilities are more constrained. Owners are managing tighter budgets and smaller footprints, while still needing to deliver a highly technical environment. That creates a different design challenge.

We’ve seen this throughout our work. Even when we worked with IBM in the 1990s, which was a major player in the industry, a number of those projects were targeted facilities rather than very large campuses.

Q: What are the biggest risk factors that you are helping your clients manage?

A: Speed to market is all-important. The client is trying to get a product to market before the competition. There’s a window, and if you miss it, even by a short period, it can affect pricing, market share, and overall business performance.

What’s changed is how difficult it has become to move quickly. Supply chain lead times for major equipment are still extended—six months for some components, more than a year for others. We thought that might normalize after the COVID era, but it hasn’t.

So, owners are being forced to make decisions earlier, sometimes without having complete information, just to keep the project on schedule.

Q: Where do mid-size chip fab projects run into delays?

A: Permitting and infrastructure are the biggest risks. To permit a semiconductor manufacturing facility, you’re working with local boards, regulatory agencies, and the public. Those processes take time, and if they’re not addressed early, they can quickly impact the schedule.

Community concerns also play a role. The most common issues are related to power demand and water use. Even a mid-scale fab requires significant energy and cooling, which in turn has water implications.

We’ve seen situations where those concerns become very real. For example, on one of our projects in Massachusetts, the local water supply was well-based and fluctuated seasonally. During dry periods, there were already restrictions on residential use. When a new manufacturing facility was proposed, the community wanted to understand the impact.

In that case, the solution involved coordination with regional infrastructure. The municipality was able to extend its connection to the Massachusetts Water Resource Authority (MWRA) system, and the client funded that expansion.

That’s a good example of how these issues are resolved. It’s not just about design, it’s about working with communities, understanding concerns, and identifying viable solutions early in the process.

Q: How do CHIPS Act requirements influence project timelines?

A: CHIPS Act funding can compress timelines significantly. On a recent project, our client needed to spend a portion of the project budget by the end of 2026 to meet funding requirements. That effectively set the project schedule.

In many cases, clients are already aiming to deliver a project within about a year. When you introduce funding milestones on top of that, it becomes even more critical to define the sequence of decisions upfront.

Our team, the client, the construction manager, and the design professionals have to work backward from those deadlines. What needs to be decided immediately? Which packages need to be released first? What information is available, and what still needs to be defined? That approach changes the entire cadence of the project.

Q: What does it take to deliver a chip fab on such a tight schedule?

A: It requires a different approach to project delivery. At SMMA, we’ve moved away from a traditional linear process and toward a more compressed, overlapping model. Early programming and workshops with the client are key. Those discussions cover everything—cleanroom requirements, structural considerations, vibration, mechanical and electrical systems—so that decisions can be made quickly and with as much clarity as possible.

At the same time, early procurement is critical. Long-lead equipment needs to be identified and released early. Structural and foundation packages are often issued before the full design is complete.

Change is inevitable on projects like this. The important thing is having a process in place to manage that change while keeping the project ticking along. That comes down to coordination and communication across the entire team, which is easier when you have architecture, engineering, and permitting in-house like we do.

Q: You’ve talked about “resiliency” as a core requirement. What does that mean in practice?

Resiliency is about maintaining operations under a wide range of conditions. Semiconductor fabs operate continuously—twenty-four hours a day, seven days a week, over the entire year. Unplanned downtime can have a significant financial impact, both in terms of lost production and missed market opportunities. It’s fundamentally tied to the business case.

The facility has to be designed to keep running even if a single component fails. That means building redundancy into key systems like power, cooling, and utilities. Then you can isolate issues without shutting down the entire operation.

Q: In 2026, energy prices are volatile. How is this influencing design decisions?

A: Energy has always been a major factor, but volatility has increased the level of attention. The cost of energy affects not only operations, but also construction and material costs. Over the life of a facility, operating costs can significantly exceed the initial capital investment.

That makes system efficiency and long-term performance critical considerations. Owners are looking closely at how their facilities will be powered, how they will be cooled, and how those systems will perform as conditions change. It also reinforces the need for coordination with utilities and local infrastructure providers.

Q: Looking ahead, what should owners prioritize when planning a new facility?

A: Adaptability. The challenge is designing a facility that can accommodate future technologies that aren’t fully defined yet. That has always been part of this industry, but the pace of project delivery with its inherent need for change has accelerated.

One approach is to plan for expansion and modification from the outset. This can mean leaving space for additional equipment such as chillers, designing systems that can be augmented, and allowing for upgrades without major disruption. We often incorporate that thinking into the initial design. You may not need a certain level of capacity today, but you should plan for it so the facility can evolve over time without creating adverse impacts to production and operations down the road.

With any advanced technology project, adaptability is essential from the beginning. At Ohio State University, for example, we worked on a facility focused on MEMS-based drug delivery. At the start, the technology was still being defined. They needed a facility that was adaptable enough to support that development process in real time.

That’s a good illustration of where the industry is heading. The facility isn’t just supporting production—it’s enabling innovation.