To help Micron Technology build the first onshore semiconductor memory fabs in the U.S. in decades, the U.S. Department of Commerce (DoC) has primarily approved $6.14 billion in direct funding through the CHIPS and Science Act.
The move is not surprising given how quickly the U.S. government has ramped up direct funding in just one month. After GlobalFoundries received $1.5 billion in February, the DoC awarded Intel Corp. $8.5 billion; TSMC $6.6 billion; and Samsung Electronics $6.4 billion all in under one month.
The direct funding for Micron Technology marks the seventh company receiving direct funding from the CHIPS Act. Microchip Technology got the second funding of $162 million and BAE Systems was the first CHIPS Act funding recipient of $35 million.
Micron is currently on track to build memory manufacturing fabs in Boise, Idaho, and in Clay, New York. Micron said it will invest about $50 billion in gross capital expenditure for U.S. domestic memory manufacturing through 2030. The CHIPS Act funding, along with state and local incentives, will help with the overall cost of construction of these fabs.
Micron said that it will potentially invest a total of $125 billion over the next two decades to build up to four fabs in Clay, New York, as well as expansion of facilities in Boise, Idaho.
Other incentives that Micron will receive include up to a 25% credit for qualified capital investments through the Investment Tax Credit grant. Additionally, New York state has made up to $5.5 billion in incentives over the life of the Clay, New York, project.
“The significant semiconductor manufacturing incentives announced today will help boost domestic semiconductor production and innovation, create jobs, make U.S. supply chains more resilient, and bolster America’s economic and national security,” said John Neuffer, president and CEO of Semiconductor Industry Association (SIA).
According to the SIA, more than 80 new projects across 25 states since the CHIPS Act was introduced. These projects could create more than 50,000 U.S. jobs in the semiconductor field as well as hundreds of thousands of indirect jobs in the U.S. economy.
Why it matters
According to the SIA, U.S. domestic semiconductor manufacturing reached as much as 37% in the 1990s. Today it resides below 12%. If nothing is done in the future, it will continue to fall.
The CHIPS Act is designed to bring domestic semiconductor manufacturing back to the U.S. By giving companies subsidies to build new chip fabs domestically, the hope is that it will strengthen its dependance on home-grown chips and less on globally produced chips.
When the COVID-19 pandemic hit, this aggregation of the semiconductor supply chain in Taiwan, Korea and China caused a massive semiconductor shortage that lasted nearly three years. With this new U.S. government support, the hope is that chipmakers will be wooed into building new sites in the U.S. so that if another pandemic happens or a geopolitical issue emerges, the supply chain will be more resilient.
