US sets guidelines for semiconductor makers seeking CHIPS Act funds

The Biden administration has launched an application process with guidelines for proposals from semiconductor manufacturers seeking to take advantage of incentives provided by the US CHIPS and Science Act.

The filing process is aimed at advancing the Biden administration’s goals to “revive the domestic semiconductor industry and bring supply chains back to the U.S.,” the Commerce Department said in a statement. press release.

The Department of Commerce administers the $50 billion CHIPS program to revitalize the US semiconductor industry, which includes $39 billion in incentives to expand or build manufacturing facilities. The incentives are designed to “restore U.S. leadership in semiconductor manufacturing, support high-paying jobs in the semiconductor supply chain, and promote U.S. economic and national security,” the Commerce Department said.

The first CHIPS Act funds are aimed at building facilities

The first funding opportunity under the CHIPS program is for “applications for projects to build, expand or modernize commercial facilities for the production of advanced, current generation and mature node semiconductors. This includes both front-end wafer manufacturing and back-end packaging,” the commerce department said.

Some conditions showed the administration’s social and economic priorities, including for a diverse workforce. Applicants seeking more than $150 million in direct funding must submit plans “to provide both their facilities and construction workers with access to affordable, accessible, reliable, and high-quality child care. In addition, applicants are strongly encouraged to use project employment contracts for construction projects,” the department said.

Chip shortage seen as a national emergency

In a rack last year, Raimondo called the semiconductor shortage caused by the pandemic a “national security” issue, demonstrating that U.S. manufacturing relies on chip imports from outside the country. Semiconductors play an important role in military applications and are critical components in cybersecurity tools.

The US share of global semiconductor manufacturing capacity has plummeted from 37% in 1990 to 12% in 2022, according to a report by the Semiconductor Industry Association, “primarily because governments of other countries have invested ambitiously in chip manufacturing incentives and the U.S. government has not.”

In response, the Biden administration and the US Congress hammered together several separate bills to enact the CHIPS Act, which Biden signed into law last August. This has led several chip manufacturing giants including TSMC, Samsung and Intel to announce investments.

“Semiconductor chips are the building blocks of the modern economy – they power our smartphones and cars. And for years, production was sent abroad. For the sake of American jobs and our economy, we need to make these at home. The CHIPS for America Act will get that done,” said President Biden tweeted last year.

“America is going to lead the way in microchip manufacturing,” the president promised in another tweet later last year.