Biden administration expands $52B CHIPS Act subsidies to suppliers and toolmakers
Christopher Hutton
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The Biden administration has expanded eligibility for subsidies worth billions of dollars for domestic semiconductor manufacturing to allow the companies’ suppliers to benefit and encourage business in the United States.
The change to criteria was announced on Friday by the Commerce Department, which is overseeing the deployment and use of more than $52 billion in taxpayer dollars provided by the CHIPS Act. The bill was passed last year to encourage companies to build semiconductor factories in the U.S. to help the country compete with China.
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“We can have as many fabs as we want, but the reality is, we also need the supply chain — the chemicals, the material, the tools that go into those fabs,” Commerce Secretary Gina Raimondo said at a briefing.
The new criteria were implemented more than half a year after leading chip manufacturer TSMC sent a letter to the Commerce Department stating that it was working with dozens of suppliers worldwide to construct a $40 billion semiconductor factory, or “fab,” in Arizona. “They are crucial to TSMC’s success and ought to be favorably considered for funding, should they apply,” the company wrote, according to a letter acquired by the Wall Street Journal.
Expanding the options for funding is meant to help incentivize suppliers to work within the U.S. There are only a few chip manufacturers capable of building high-end factories, according to a senior Commerce Department official. The official added that more than 250 material and equipment companies support the industry in the U.S.
India is also pushing to attract the business of chipmakers. Indian Prime Minister Narendra Modi invited U.S. chipmaker Micron to boost manufacturing in India after the government approved plans for a $2.75 billion semiconductor testing and packaging unit.
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The Chinese government has already cut back on government funding for improving chip manufacturing, which could slow the country’s ability to keep up with the U.S. in chip development.
U.S. factories are also competing to get access to CHIPS Act funding. Raimondo announced in February that the U.S. would construct at least two new semiconductor factory hubs with the money provided by CHIPS.