The Biden-Harris administration has opened the first funding opportunity stemming from the passage of the CHIPS and Science Act; however, manufacturers may have to share excess profits.
The CHIPS Act will provide $52 billion in incentives and tax breaks for semiconductor manufacturing vendors to build new fabrication facilities in the U.S. and give research grants to those looking to develop R&D for next generation technologies.
According to a report from Reuters, the funding won’t be a free handout for multi-billion-dollar companies but these companies will be required to share a portion of future profits if they do exceedingly well. Any chipmaker that receives more than $150 million in direct funding would qualify for this threshold. However, there was no mention of how this would work.
Additionally, companies winning funding will be prohibited from using the funds for dividends or stock buybacks.
First opportunity
Through the U.S. Department of Commerce’s National Institute of Standards and Technology, the first funding opportunity seeks applications for projects “to construct, expand or modernize commercial facilities for the production of leading-edge, current-generation and mature-node semiconductors,” the USDOC said in a statement.
This will include front-end wafer fabrication and back-end packaging but also for semiconductor materials and equipment facilities, which will come in the late spring.
According to U.S. Secretary of Commerce Gina M. Raimondo, the act will allow the U.S. to “be the premier destination in the world where new leading-edge chip architectures can be invented in our research labs” and these factories will be “designed for every end-use application, manufactured at scale and packaged with most advanced technologies.”
Additionally, Raimondo said the CHIPS Act will be committed to:
- Protecting taxpayer dollars
- Strengthen America’s workforce
- Give businesses a platform to innovate, scale and compete
Projects already happening
According to the Semiconductor Industry Association, more than 40 new semiconductor ecosystem projects have already been attracted to the U.S. due to the CHIPS Act to the tune of $186.6 billion.
The projects associated with the CHIPS Act, which was signed into law by U.S. President Joe Biden in August, include the construction of new semiconductor manufacturing fabs and expansions of existing sites and facilities that supply the materials and equipment used in chip manufacturing.
The hope is that chipmakers will be wooed into building new sites in America so when another pandemic happens, or a geopolitical issue, or a raw materials shortage, the supply chain will be more resilient.
This has caused a flurry of activity in semiconductor manufacturing in the U.S. including:
- Intel building two new fabs in Ohio.
- TSMC building two fabs in Arizona.
- Samsung building a fab in Tyler, Texas.
- Micron building a new memory fab in Idaho.
- GlobalFoundries is set to build a new facility in Malta, New York.
How it will work
The USDOC said it will evaluate applications based on how these projects can advance U.S. economic and national security. The applications will be evaluated for viability, financial strength, technical feasibility and readiness, workforce development and efforts to spur inclusive economic growth, the USDOC said.
Awards will include direct funding, federal loads or federal guarantees of third-party loans. These funds will be made as soon as applications are evaluated and negotiated, it said.
