This week marks one year since President Biden launched the CHIPS and Science Act, which includes investing $52.7 billion into domestic US chip manufacturing
Part of the Biden Administration’s $2 trillion dollar infrastructure plan, the funding in US chip production aim to improve national security by decreasing reliance on foreign countries.
As of last year, the US only produced 12% of the world’s chips, leaving many US firms heavily dependent on international chip manufacturers, primarily in Asia. In particular, Taiwan produces 22% of global chip production and more over 90% of the most advanced chips made.
The fragility of the chip supply chain has been exposed in recent years, especially since President Trump’s executive order that banned the use of telecommunications equipment from foreign companies deemed a national security risk, impacting Chinese firms like Huawei. In an effort to combat this over reliance on international manufacturing, the US hopes investment from the CHIP act will result in a much needed boost for US domestic chip manufacturing.
One firm taking advantage of the CHIPS act is Intel. One year on from the announcement, the firm has released progress updates on their new manufacturing facilities. In 2021, Intel announced over $43.5 billion in manufacturing investments across the US, including in Arizona, New Mexico, and Ohio.
In Arizona, Intel will expand its production capabilities, growing from two to four semiconductor factories at an estimated cost of around $20 billion each; in New Mexico, the company is investing $3.5 billion in equipment upgrades for the existing plant; and in Oregon, the company is planning a ‘multi-billion-dollar expansion and modernisation’ of their facilities.
They also announced a $100 million dollar investment into the expansion of semiconductor education, research, and employee training across the country, to give their American workforce the necessary skills to outperform competitors.
The company has reaffirmed its commitment to deliver on its promise of creating ‘five process nodes in four years’ and bringing back process technology leadership to the US by 2025 but is hoping to be ahead of schedule.
But while Intel is reaffirming its dedication to US domestic technological progress, but for other firms is the journey is less simple.
Despite the CHIPS Act being signed over a year ago, no money has yet been awarded. The Commerce Department said it has received more than 460 statements of interest to manufacture semiconductors in the US, with each application needing extensive evaluation.
“We will start to give out the money later this year,” said Secretary of Commerce Gina Raimondo. “We’re pushing the team to go fast, but even more important, to get it right.”
Even though potential for government funding has sparked huge private sector investment, many of these investments are dependent upon the release of the federal funding, as operating margins are too slim for firms to achieve their goals without the financial aid.
Integra Technologies, for example, which provides semiconductor packaging and other services, plans to build a 1 million-square-foot facility in the Wichita, Kansas, area, provided it can receive federal funding.
CEO of SkyWater Technology, Tom Sonderman, noted that “in terms of industry speed, maybe it’s not as fast as we’d like, but in terms of the government really stepping up and preparing for what’s coming, I’ve been impressed.”
A group of 140 staff members have been hired by the Department of Commerce to assess funding applications. Whilst firms wait for the outcomes, the Department of Commerce has said “we’re going to have a bunch of tough choices ahead in terms of how we allocate our capital. There’s definite expectations that not every applicant is going to be happy. Some will be disappointed.”