The CHIPS and Science Act provides $52.7 billion for American semiconductor research, development, manufacturing, and workforce development. The Act’ provides $39 billion in manufacturing incentives, including $2 billion for the legacy chips used in automobiles and defense systems; $13.2 billion in R&D and workforce development; and $500 million for international information communications technology security and semiconductor supply chain activities.
That R&D money includes $11 billion in funding to advance four programs: the National Semiconductor Technology Center (NSTC); the National Advanced Packaging Manufacturing Program (NAPMP); the CHIPS Metrology Program; and the CHIPS Manufacturing USA Institute. The Act also provides a 25% investment tax credit for capital expenses for manufacturing of semiconductors and related equipment.
The CHIPS Act’s purpose was to strengthen American supply chain resilience after problems caused by the COVID-19 pandemic and to counter China’s rising share of the market. The US share of global semiconductor fabrication capacity has fallen from about 36% in 1990 to about 10% in 2020, according to a Congressional Research Service report. Meanwhile, China’s share of chip manufacturing has grown nearly 50% over the past two years and now comprises about 18% of the world’s supply.
In 2023, the Department of Commerce, which is administering the CHIPS Act, spent months negotiating with semiconductor designers and fabricators to gain commitments from the companies and to achieve specific milestones in their projects before getting government payouts. For example, negotiations between the federal government and TSMC resulted in the Taiwanese semiconductor designer and manufacturer being promised $6.6 billion in CHIPS Act funding; in return, the company pledged to bring its most advanced 2nm process technology to US shores and added plans for a third fabrication plant to its Arizona site.
The White House has argued that CHIPS Act spending will grow America’s share of the world’s leading-edge chip market to 20% by 2030. But industry experts say more government incentives will be needed to sustain and continue that growth domestically.
According to Mario Morales, a group vice president at IDC, the current CHIPS Act is just the start; he expects the Biden Administration to champion a second CHIPS Act that will spend even more money and likely be approved sometime around 2026 or 2027. There may also be a third CHIPS Act after that, Morales said.
The current CHIPS Act was passed by Congress and signed into law by US President Joseph R. Biden Jr. on Aug. 9, 2022.
Since December 2023, the Commerce Department has allocated about $29 billion in funding among chipmakers, including Samsung, TSMC and Intel. In return, various chip designers and makers have pledged about $300 billion in current and future projects in the US, according to the White House.
Here’s a timeline of where the money is going, with the most recent allocations listed first:
April 2024
Micron, which plans to build two new fabrication plants in upstate New York and another in Boise, Idaho – where its headquarters is located, got $6.14 billion in funding.
Samsung got $6.4 billion to build leading-edge logic, R&D, and advanced packaging fabs in Taylor, TX, and to expand a current-generation and mature-node facility in Austin, TX.
TSMC got $6.6 billion to support the development of three greenfield leading-edge fabs in Phoenix, AZ.
March 2024
Intel was awarded $8.5 billion in funding, the most of any CHIPS Act allocations to date. Intel expects to use the money to advance its commercial semiconductor projects in Arizona, New Mexico, Ohio and Oregon. The company also said the funds would create more than 10,000 company jobs and nearly 20,000 construction jobs, and would support more than 50,000 indirect jobs with suppliers and supporting industries.
February 2024
NSTC in Albany, NY was promised more than $5 billion in funding. The NSTC is a public-private partnership that will perform research on next-generation semiconductor technologies by supporting the design, prototyping, and piloting of the latest semiconductor technologies.
GlobalFoundries, in Malta, N.Y. and Essex Junction, VT. (GF) is expected to receive about $1.5 billion to help them expand and create new manufacturing capacity and capabilities for automotive, IoT, aerospace, defense, and other markets. GF’s chips are used in everything from blind spot detection and collision warnings in cars, to smartphones and electric vehicles that last longer between charges, to secure and reliable Wi-Fi and cellular connections.
January 2024
Microchip Technology Inc. got $162 million to increase its production of microcontroller units and other specialty semiconductors, and to support the modernization and expansion of fabrication facilities in Colorado Springs, CO, and Gresham, OR.
December 2023
The first of the CHIPS Act allocations, about $35 million, went to BAE Systems Inc., a federal government contractor. BAE was expected to use the money to help modernize an aging Nashua, NH facility and help quadruple the company’s production capacity for chips used in F-35 fighter jets.
CPUs and Processors, Government, Manufacturing Industry
