Semiconductor Manufacturing Clusters To Be Created With Chips Act Funds

According to Commerce Secretary Gina Raimondo, the U.S. will use cash from the $53 billion Chips Act to establish at least two semiconductor manufacturing clusters by 2030, kicking off a strategy to bring more chip manufacturing back to the country.

‍

The goal, according to Ms. Raimondo, would be to construct ecosystems that would unite manufacturing facilities, R&D facilities, final packaging facilities for chip assembly, and the suppliers required to support each stage of the process.

‍

The world's most cutting-edge semiconductor chips would be designed and produced in America by the time this is fully implemented by 2030, she assured reporters during a briefing on Wednesday.

‍

The initiatives will be discussed by Ms. Raimondo in a speech at Georgetown University on Thursday. The Commerce Department will provide further information about how businesses can apply for funding next week.

‍

Ms. Raimondo did not specify the locations of the clusters, but based on the investment plans of businesses that currently make cutting-edge chips, including Intel Corp., Samsung Electronics Co. of South Korea, and Taiwan Semiconductor Manufacturing Co., Arizona, Ohio, and Texas would probably be contenders.

‍

According to Intel, it will invest $20 billion in both Chandler, Arizona, and New Albany, Ohio, sites. In Phoenix, TSMC is working on a $40 billion project, and Samsung Electronics is putting $17.3 billion into a factory in Texas. 

‍

Texas Instruments and Micron Technology Inc. have also made their investment plans public.

‍

According to a trade group, the Semiconductor Industry Association, the initiative has already spurred an investment boom, with American and foreign manufacturers announcing more than 40 projects with a combined investment of around $200 billion.

‍

After receiving bipartisan support in Congress, President Biden signed the Chips Act into law in August. It offers $39 billion in tax breaks to support the construction and expansion of industrial facilities and more than $12 billion for workforce training and R&D. 

‍

The Act was passed when the pandemic caused a scarcity of semiconductors that hampered the production of automobiles, appliances, and other goods, and after worries grew about the concentration of advanced-chip manufacturing in East Asia as economic competition with China grew.

‍

Industry supporters have highlighted worries about funding distribution and the availability of competent employees in the United States to construct and run new facilities. In the upcoming years, the government, according to Ms. Raimondo, would put pressure on chip makers to partner with high schools and community colleges to teach more than 100,000 new technicians.

‍

The U.S. contribution of worldwide semiconductor production has decreased from 37% in 1990 to roughly 10% as businesses have relocated plants overseas in quest of lower labor and production costs. The most advanced chips, defined as those smaller than 5 nanometers, are not mass produced in the United States; instead, Taiwan, which is at the epicenter of geopolitical tensions with China, produces 85% of them.

‍

Since we as a nation have let chip manufacturing shift overseas over the past few decades, the Chips Act is very necessary, according to Ms. Raimondo.

‍

Will Hunt, an analyst for Georgetown University's Center for Security and Emerging Technologies, advises the United States to bring back enough capacity to meet all of its needs for the most cutting-edge processors.

‍

The three businesses possessing these technologies—Intel, Samsung, and TSMC—could maintain or create long-term presences in the U.S. to service domestic needs through 2027, according to Mr. Hunt, who is currently a Commerce Department adviser, in a paper from 2022.

‍

The U.S. will also increase its production capacity for current-generation and mature node chips, needed for autos, medical devices, and defense equipment, said Ms. Raimondo, adding that the Chips Act would fund plants making advanced memory chips, a segment currently experiencing oversupply and falling prices, on "economically competitive and sustainable terms."

‍

The launch of the application procedure is anticipated to increase rivalry amongst businesses seeking for the incentives.

‍

The choice of the awardees, according to Ms. Raimondo, would be based on how well the plans mesh with the government's objectives for national security. "The goal of this law isn't to provide financial support to struggling businesses in this cyclical downturn. It's not necessarily to help businesses in America become more profitable, she said. "In actuality, the attainment of our national security objective represents the return on our investment here."

‍

There would be "many disappointed corporations," she continued, about the sums they will receive.

‍

According to Ms. Raimondo, the new clusters will be constructed by union employees in accordance with the rules of the Chips Act and will afterwards be a source of thousands of jobs, many of which won't require a college degree.

‍

She added that the National Semiconductor Technology Center, a research and development program funded by the Chips Act, will bring together universities, the semiconductor industry, entrepreneurs, and private capital to work on cutting-edge technologies and help meet the need to more than triple the number of college graduates in semiconductor-related fields over the following ten years.