Semiconductor Giants Seek More than Double the Chips Act Fund: Gina Raimondo

Introduction:

The U.S. semiconductor industry is experiencing a significant boost as leading-edge companies seek substantial federal funds to fuel chip manufacturing projects within the country. Commerce Secretary Gina Raimondo revealed that advanced semiconductor firms, including industry giants like Intel Corp., Taiwan Semiconductor Manufacturing Co. (TSMC), and Samsung Electronics Co., have requested more than double the available federal funds allocated under the 2022 Chips Act. This program aims to revive semiconductor manufacturing on American soil and addresses the growing demand for chips critical to various industries.

Funding Requests and Legislation Overview:

According to Raimondo, companies are seeking over $70 billion from the 2022 Chips Act, which initially earmarked $39 billion in grants and an additional $75 billion in loans and loan guarantees to revitalize the U.S. semiconductor manufacturing sector.

However, the Commerce Department plans to allocate $28 billion from the grant pool to support the establishment of leading-edge semiconductor facilities.

The legislation is a response to decades of semiconductor production moving abroad, aiming to reestablish the U.S. as a key player in the global semiconductor market.

Key Players and Intel’s Negotiations:

Prominent players in the semiconductor industry, such as Intel, are actively engaging with the Biden administration for incentives exceeding $10 billion, combining grants and loans.

However, reports suggest that major award announcements, including those for Intel, could be made by the end of March. This underscores the government’s commitment to supporting and incentivizing semiconductor manufacturers, playing a crucial role in addressing the ongoing global semiconductor shortage.

Prioritizing Projects and Companies:

With more than 600 firms expressing interest in the program, the Commerce Department faces the challenge of selecting recipients. Raimondo highlighted the need to prioritize smaller grants for smaller applicants while acknowledging the interest from industry giants.

The emphasis is on projects that can complete by 2030, ensuring a strategic focus on the long-term growth and sustainability of the U.S. semiconductor industry.

Funding Impact and Global Market Share:

Raimondo emphasized that chip companies in the U.S. had already invested over $200 billion before the federal funds were allocated. The announced awards are preliminary, subject to additional due diligence, and companies will disburse them over time based on meeting negotiated benchmarks. The ambitious goal is for the U.S. to produce 20% of the world’s advanced logic chips by the end of the decade, positioning the country as a significant contributor to the global semiconductor market.

Conclusion:

The surge in funding requests from advanced semiconductor companies signals a turning point for the U.S. semiconductor industry. With substantial federal support, the sector stands poised for growth, potentially reducing reliance on overseas production and addressing global semiconductor supply chain challenges. The successful implementation of the 2022 Chips Act could solidify the U.S. as a major player in the semiconductor market, fostering innovation, job creation, and economic development in the coming years.