The U.S. Semiconductor Industry Awaits Federal Funding Promised by the CHIPS Act
One year after President Joe Biden signed the CHIPS and Science Act into law, the U.S. semiconductor industry is still waiting for the financial benefits it promised. Secretary of Commerce Gina Raimondo stated that the distribution of funds will begin later this year, emphasizing the importance of both speed and accuracy in the process.
The Goal of the CHIPS Act
The $52.7 billion package aimed to strengthen the semiconductor supply chain within the United States, thereby enhancing national security by reducing reliance on foreign countries. It also included a provision that prevents funding recipients from expanding semiconductor manufacturing in China or other countries considered national security risks by the U.S. government.
Delay in Funding Distribution
Despite the intended purpose of federal subsidies to assist in the construction of semiconductor manufacturing hubs, no funding has been awarded through the legislation thus far. The Department of Commerce has received over 460 statements of interest from companies worldwide seeking federal funding for their projects, an increase from the previous update of nearly 400.
The Potential Impact of Federal Funding
Anticipation of federal funding has spurred significant investments in the semiconductor sector. The White House reports that $231 billion has been announced in private sector semiconductor investments in the United States. However, many of these projects are contingent on receiving government aid.
For instance, Integra Technologies, a company providing semiconductor packaging and services, plans to build a 1-million-square-foot facility in Wichita, Kansas, which hinges on securing federal funding. Similarly, SkyWater Technology is waiting for funding approval before initiating construction on its planned $1.8 billion plant in West Lafayette, Indiana, with expectations to hire 700 new employees.
Government Support and Evaluation Process
The Department of Commerce has employed 140 staff members responsible for evaluating CHIPS Act applications and is actively engaging with potential recipients. Despite the delay in federal funding, larger semiconductor firms such as Intel, Taiwan Semiconductor Manufacturing Company, and Wolfspeed have commenced expansion projects using their own resources.
Expectations and Challenges
While promises of billions of dollars in chip investments have been made, not all applicants should expect to receive aid. A senior Commerce Department official acknowledges the need for tough decisions in capital allocation and warns that not every applicant will be satisfied.