High demand for $52 billion semiconductor chip funding reported in the US

High demand for $52 billion semiconductor chip funding reported in the US

semiconductor subsidy funding

U.S. Seeks to Boost Semiconductor Competitiveness with China

The U.S. Commerce Department has announced that over 460 companies have expressed interest in winning government semiconductor subsidy funding in a bid to enhance the country’s competitiveness with China’s science and technology efforts. This comes as the U.S. marks the one-year anniversary of President Joe Biden’s signing of the landmark “Chips for America” legislation. The legislation provides $52.7 billion in subsidies for U.S. semiconductor production, research, and workforce development.

According to President Biden, companies have already announced $166 billion in semiconductors and electronics manufacturing over the past year. He further asserts that this law will help the U.S. regain its leadership in semiconductor manufacturing and reduce reliance on other countries for electronics or clean energy supply chains.

The Commerce Department has, since June, been accepting applications for the $39-billion subsidy program for U.S. semiconductor manufacturing, as well as equipment and materials for making chips. However, no awards have been issued yet. Commerce Secretary Gina Raimondo emphasized the importance of moving quickly but also ensuring that the process is executed correctly.

The initiative encompasses a 25% investment tax credit for building chip plants, estimated to be worth $24 billion. Intel CEO Pat Gelsinger commended the efforts, acknowledging the global progress being made to revitalize semiconductor manufacturing and fortify supply chains. He specifically praised the undeniable progress being made in the U.S.

Over the past year, the Commerce Department has been diligently building a team of more than 140 people and formulating rules for accepting and evaluating applications. They are also taking steps to ensure that China does not benefit from U.S. funding. Companies seeking major awards have to provide access to affordable high-quality childcare and share any excess profits.

Direct funding awards are expected to range between 5% and 15% of project capital expenditures, with total award amounts generally not exceeding 35% of project capital expenditures. Secretary Raimondo emphasized that diligence and scrutiny will be applied in the evaluation process.

Once the Commerce Department identifies worthy projects, officials will determine the amount of government funds to allocate and the structure of the awards. This may include a mix of grants, government loans, or loan guarantees.

The “Chips for America” legislation also designates $11 billion for advanced semiconductor manufacturing research and development. The National Semiconductor Technology Center will play a crucial role in this endeavor. The departments of Commerce, Defense, Energy, and the National Science Foundation are in discussions to establish the center, aiming to integrate research, development, and workforce efforts across the semiconductor ecosystem. However, no location has been identified yet.

The U.S. government’s push to bolster domestic semiconductor manufacturing is a significant step towards strengthening the country’s technological competitiveness and reducing reliance on other nations. With a focus on innovation, research, and development, the semiconductor industry in the U.S. is poised to regain its global leadership, ensuring economic and national security for years to come.