President Joe Biden’s $39B semiconductor project has now started
On February 28, 2023 the Biden administration launched a massive effort to outcompete China in semiconductor manufacturing, offering $39 billion in funding incentives for companies seeking to build manufacturing plants in the United States. Commerce Secretary Gina Raimondo stated, “When we have finished implementing CHIPS for America, we will be the premier destination in the world where new leading-edge chip architectures can be invented in our research labs, designed for every end-use application, manufactured at scale and packaged with the most advanced technologies.”
President Joe Biden speaking on rebuilding American manufacturing through the Chips and Science Act. (Image source: Reuters Photos, Joshua Roberts)
The Commerce Department opened the application process on Tuesday for companies seeking a share of the funding, prioritizing applicants that plan to construct domestic chip manufacturing facilities that can protect and leverage the billions in taxpayer money to advance US national security goals. As the press release from the Commerce Department stated, “Applications will also be evaluated for commercial viability, financial strength, technical feasibility and readiness, workforce development, and efforts to spur inclusive economic growth.”
Moreover, companies applying for more than $150 million in funding will be required to provide childcare for construction and factory workers, restrict stock buybacks, and share part of their profits with the government if they are more profitable than projected. As Al Thompson, Intel’s Vice President of US Government Relations, said in a statement, “Today’s Notice of Funding Opportunity is an important step for American semiconductors to be globally competitive.”
The Biden administration plans to hold additional funding rounds this spring and fall to boost investment in chip-making materials and research facilities. Major chip manufacturers, such as Intel, have already leveraged the industry’s excitement over the money to strike new commercial partnerships and build factories across the US.
However, some lawmakers, such as Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT), have sought to limit stock buybacks from companies receiving CHIPS Act funding. While the Commerce Department’s plans ban grants for stock buybacks, Warren called the department’s rules “disappointing” and stated in a tweet, “Not a single public dollar should help executives goose their stock prices.”
Nonetheless, the program’s launch was celebrated by other Democrats, such as Rep. Frank Pallone Jr. (D-NJ), who said in a statement, “Today’s Notice of Funding Opportunity is a crucial step to unleashing the promise of the CHIPS and Science Act to create good-paying jobs right here at home and end our dangerous dependence on semiconductors manufactured abroad.”
As part of Tuesday’s announcement, the Commerce Department laid out its goals for the next decade, intending to create two new “large-scale clusters” of chip fabs that manufacture “leading-edge” memory chips and current-generation and mature-node chips.