The U.S. Department of Commerce is strategically allocating funds from the CHIPS and Science Act of 2022 to prioritize semiconductor chip plant projects slated for completion by 2030. Commerce Secretary Gina Raimondo revealed this focus during her address at the Center for Strategic and International Studies in Washington on February 26th.
With an overwhelming response of over 600 expressions of interest from manufacturers seeking a portion of the $39 billion allocated for plant construction incentives, Raimondo emphasized the need to maximize the impact of funding within the decade to address urgent national security goals. Consequently, projects scheduled for completion after 2030 will not be considered at this time.
Raimondo underscored the importance of directing resources towards projects with shorter timelines, stating, “It’s not responsible to give money to a project that will come online 10 or 12 years from now if it means saying ‘no’ to excellent projects that could come online this year.”
The Commerce Department has received over 160 complete applications for funding, encompassing projects both exceeding and falling below the $300 million threshold. Approximately $28 billion of the CHIPS Act funding is earmarked for projects focusing on the production of “leading edge” chips crucial for advancements in artificial intelligence. However, the demand from leading-edge chip manufacturers alone exceeds $70 billion.
The overarching goal is to elevate U.S. semiconductor manufacturing capabilities from a state of near absence in leading-edge logic chips to supplying about 20% of the global demand by the end of the decade.
Recognizing the critical intersection of semiconductor manufacturing with economic stability and national security, the Biden administration has prioritized domestic chip production. The COVID-19 pandemic underscored the vulnerability of global supply chains, with chip shortages affecting various industries, including defense.
Raimondo emphasized the government’s role in targeted investments to achieve national security objectives, stressing the importance of collaborative efforts between the public and private sectors.
Since the program’s inception, the private sector has pledged $200 billion in semiconductor manufacturing investments. Additionally, nine states have initiated economic development programs aimed at bolstering the semiconductor sector, offering matching funding.
The Commerce Department has already entered preliminary agreements with three companies to disburse CHIPS Act funding. Notably, the largest award of $1.5 billion was granted to three GlobalFoundries projects in New York and Vermont, with smaller amounts allocated to BAE Systems Inc. and Microchip Technology Inc.
