Biden Administration Preparing To Invest $50 Billion In The US Semiconductor Industry

Fb_rTg4XwAErBgN.png


The Biden administration has announced plans to invest $50 billion in the US semiconductor industry, in order to "revitalize the domestic semiconductor industry and spur innovation while creating good-paying jobs in communities across the country," according to U.S. Commerce Secretary Gina Raimondo.

In August, US President Joe Biden signed an executive order for a $280 billion chips bill, designed to increase domestic high-tech manufacturing.

The Commerce Department said it expects $50 billion from the bipartisan CHIPS Act of 2022, signed by President Biden last month to be rolled out next spring.
The department outlined the four "primary goals" as:
  • Establish and expand domestic production of leading-edge semiconductors in the US, of which the US currently makes 0% of the world’s supply
  • Build a sufficient and stable supply of mature node semiconductors
  • Invest in R&D to ensure the next-generation semiconductor technology is developed and produced in the US.
  • Create tens of thousands of good-paying manufacturing jobs and more than a hundred thousand construction jobs. This effort will ensure the pipeline for these jobs expands to include people who have historically not had a chance to participate in this industry, including women, people of color, veterans, and people who live in rural areas.
U.S. Commerce Secretary Gina Raimondo, who announced the plan on Tuesday told reporters, "With this funding, we’re going to make sure the United States is never again in a position where our national security interests are compromised or key industries are immobilized due to our inability to produce essential semiconductors here at home".

On July 31st, the White House said that the United States' production of semiconductor chips had declined from 40 percent to just 12 percent, while China's production increased from 2 percent to 16 percent.

"Through the CHIPS for America Act, @POTUS has made it clear that the U.S. must lead the world in the production of semiconductor chips." The White House stated on Twitter.

Recently, AMD reported that the United States ordered it not to sell advanced artificial intelligence (AI) chips to Russia and China, in an apparent attempt at restraining their technological advancement.

During his presidency, former president Donald J. Trump blacklisted many Chinese-based companies, including China's top producer of microchips and semiconductors in order to hinder China's ability to use the technology to manufacture weapons of war.

There have been numerous reports that both Russia and China have been using American microchip technology in their advanced weaponry.

Upon assuming the presidency, Biden has been putting more restrictions on Chinese companies, blacklisting 7 Chinese supercomputing companies building supercomputers for China's military last year.

Invasion Of Taiwan Would Give China Edge Over Microchip Industry

China has been Increasingly Aggressive about controlling the microchip industry. One of the ways China might do this is by controlling the island of Taiwan, which accounts for 92 percent of the production of advanced semiconductors, according to Reuters.

Martijn Rasser, Senior Fellow from Washington think tank Technology and National Security Program at the Center for a New American Security (CNAS) said that "Semiconductors are the ground zero of the global technology competition. They're in everything that we need to function as a society".

He also said "by gaining control over Taiwan’s semiconductor industry, China would control the global market. They would have access to the most advanced manufacturing capabilities and that is even more valuable than controlling the world's oil."

US Department Of Commerce Statement On $50 Billion CHIPS Program

"Today, the U.S. Department of Commerce released its strategy outlining how the Department will implement $50 billion from the bipartisan CHIPS Act of 2022, signed by President Biden last month. The CHIPS for America program, housed within the Department’s National Institute of Standards and Technology (NIST), will revitalize the domestic semiconductor industry and spur innovation while creating good-paying jobs in communities across the country.

“Rebuilding America’s leadership in the semiconductor industry is a down payment on our future as a global leader,” said U.S. Secretary of Commerce Gina Raimondo. “CHIPS for America will ensure continued US leadership in the industries that underpin our national security and economic competitiveness. Under President Biden’s leadership, we are once again making things in America, revitalizing our manufacturing industry after decades of disinvestment and making the investments we need to lead the world in technology and innovation.”

The
strategy, released today, outlines the initiatives, strategic goals, and guardrails guiding the CHIPS for America program.

The program’s four primary goals are:

  • Establish and expand domestic production of leading-edge semiconductors in the US, of which the US currently makes 0% of the world’s supply
  • Build a sufficient and stable supply of mature node semiconductors
  • Invest in R&D to ensure the next-generation semiconductor technology is developed and produced in the US.
  • Create tens of thousands of good-paying manufacturing jobs and more than a hundred thousand construction jobs. This effort will ensure the pipeline for these jobs expands to include people who have historically not had a chance to participate in this industry, including women, people of color, veterans, and people who live in rural areas.
The program supports three distinct initiatives:
  • Large-scale investments in leading-edge manufacturing: The CHIPS incentives program will target approximately three-quarters of the incentives funding, around $28 billion, to establish domestic production of leading-edge logic and memory chips that require the most sophisticated manufacturing processes available today. Those amounts may be available for grants or cooperative agreements, or to subsidize loans or loan guarantees. The Department is still assessing the impact of the newly enacted advanced manufacturing facility investment tax credit on capital expenditures, which will generate significant additional project investment from participants and will reduce the required share of CHIPS incentives funding allocated for leading-edge projects. The Department will seek proposals for the construction or expansion of manufacturing facilities to fabricate, package, assemble and test these critical components, particularly focusing on projects that involve multiple high-cost production lines and associated supplier ecosystems.
  • New manufacturing capacity for mature and current-generation chips, new and specialty technologies, and semiconductor industry suppliers: The CHIPS incentives program will increase domestic production of semiconductors across a range of nodes including chips used in defense and in critical commercial sectors such as automobiles, information, and communications technology, and medical devices. This initiative is broad and flexible, encouraging industry participants to craft creative proposals. For this initiative, the Department expects dozens of awards with the total value expected to be at least a quarter of the available CHIPS incentives funding, or approximately $10 billion. Those amounts may be available for grants or cooperative agreements, or to subsidize loans or loan guarantees.
  • Initiatives to strengthen US leadership in R&D: The CHIPS R&D program will invest $11 billion in a National Semiconductor Technology Center, a National Advanced Packaging Manufacturing Program, up to three new Manufacturing USA Institutes, and NIST metrology research and development programs. This constellation of programs is intended to create a dynamic new network of innovation for the semiconductor ecosystem in the United States. Executing this vision will require collaboration with academia, industry, and allied countries, and will require sustained investment over many years.
The Strategy also provides clear recommendations for potential applicants, reinforcing the Department’s commitment to advancing long-term strategic goals and identifying criteria against which applications will be evaluated. The criteria include:
  • Increase scale and attract private capital: The CHIPS incentives program will encourage large-scale investments that attract associated suppliers and workforce investments. In addition to committing their own significant resources, potential applicants are encouraged to explore creative financing structures to tap a variety of sources of capital.
  • Leverage collaborations to build out semiconductor ecosystems: The CHIPS incentives program will encourage collaboration between industry stakeholders, investors, customers, designers, suppliers, and international firms. Such collaborations could include purchase commitments, partnerships that enable fabless design, or collaborations between suppliers and producers.
  • Secure additional financial incentives and support to build regional and local industry clusters that strengthen communities: The CHIPS incentives program requires applicants to the incentives program to secure state or local incentives. The Department expects to give preference to projects that include state and local incentive packages that maximize regional and local competitiveness, invest in the surrounding community, and prioritize broad economic gains, rather than outsize financial contributions to a single company.
  • Establish a secure and resilient semiconductor supply chain: The CHIPS incentives program will prioritize projects that adhere to standards and guidelines on information security, data tracking, and verification, and that collaborate on further development and adoption of such standards.
  • Expand the workforce pipeline to match increased domestic capacity workforce needs: The CHIPS incentives program will create good-paying jobs that benefit all Americans, including economically-disadvantaged individuals and populations that may be underrepresented in the industry. The program will prioritize workforce solutions that enable employers, training providers, workforce development organizations, labor unions, and other key stakeholders to work together. The goal is to create more paid training and experiential apprenticeship programs, provide wrap-around services, prioritize creative recruitment strategies and hire workers based on their acquired skills.
  • Create inclusive and broadly-shared opportunities for businesses: The CHIPS incentives program will prioritize projects that proactively work to ensure that small businesses, minority-owned, veteran-owned, and women-owned businesses, and businesses in rural areas, benefit from opportunities generated by the CHIPS programs.
  • Provide robust financial plans: Applicants will be required to provide detailed project-specific and company-level financial data to ensure that incentive funds are meeting the economic and national security goals of the program while protecting taxpayer dollars.
Funding documents, which will provide specific application guidance for the CHIPS for America program, will be released by early February 2023. Awards and loans will be made on a rolling basis as soon as applications can be responsibly processed, evaluated, and negotiated.

An
executive summary of the strategy is available. The full strategy paper can be downloaded here. The Program’s guiding principles can be viewed on the Department’s recently launched CHIPS.gov."

Remarks by U.S. Secretary of Commerce Gina Raimondo at White House Press Briefing

Gina M. Raimondo

"Hello, everyone. It’s an honor to be here. Today is an incredibly exciting day for those of us who love CHIPS.

Thanks to President Biden’s leadership and the bipartisan work in Congress, we have an incredible opportunity to unleash the next generation of American innovation, protect our national security, and preserve our global economic competitiveness.

For decades, our innovation ecosystem has been in decline. This is the beginning of a new chapter in U.S. innovation and R&D where we reverse that decline and lead the world again.

CHIPS for America represents a historic investment in our domestic manufacturing industry, which has critical implications for our economic and national security.

With this funding, we’re going to make sure the U.S. is never in a position where its national security interests are compromised, or key industries are immobilized due to our inability to produce essential semiconductors here at home.

Over the last year, we saw the impact of the chips shortage on America’s families when car prices drove more than a third of inflation, factory workers were furloughed or household appliances were simply unavailable.

As our economy and our military become more reliant on technology, it is essential that we develop a strategy with values, outcomes, and structures that enable us to plan for an economy and manufacturing infrastructure that positions us to compete today, but also in the future.

Today, I want to take a few minutes to share an update with you on how we, at the Department of Commerce, are planning to implement the $50 billion in CHIPS Act funds that we will be overseeing.

With CHIPS for America, we’re setting out to achieve four primary objectives:

  1. Establish and expand domestic production of leading-edge semiconductors in the US, of which the US currently makes 0% of the world’s supply
  2. Build a sufficient and stable supply of mature node semiconductors
  3. Invest in R&D to ensure the next-generation semiconductor technology is developed and produced in the US.
  4. Create tens of thousands of good-paying manufacturing jobs and more than a hundred thousand construction jobs. This effort will ensure the pipeline for these jobs expands to include people who have historically not had a chance to participate in this industry, including women, people of color, veterans, and people who live in rural areas.
To achieve these goals, CHIPS for America will support three distinct initiatives.

Two of those initiatives, totaling $39 billion, will make investments in domestic chip manufacturing here in the United States.

First, we’re going to make large-scale investments in leading-edge manufacturing. CHIPS for America will target approximately $28 billion in manufacturing incentives to establish domestic production of leading-edge logic and memory chips that require the most sophisticated processes available today.

Second, we’re going to invest approximately $10 billion in new manufacturing capacity for mature or current-generation semiconductors, new and specialty technologies, and suppliers. This will help us increase domestic production across a range of semiconductors, including chips used in defense, autos, communications technology, and medical devices.

Finally, we’re going to make historic investments to strengthen America’s research and innovation leadership. $11 billion will go to research and development programs, including the creation of a National Semiconductor Technology Center.

We expect to be in a position to receive applications from companies no later than early February 2023, with a priority on funding applications for the incentives programs.
After that, we will rigorously evaluate the applications we receive and negotiate deals for successful applications. We will work to issue awards and loans as quickly as we are able to responsibly process them.

Before I close, I want to take a minute to send a very clear message about how we plan to protect taxpayer dollars in this program.

  • CHIPS funds may never be used for stock buybacks.
  • CHIPS funds are not intended to replace private capital and taxpayer funds will only be used to fill gaps, secure other funding, and as loan guarantees.
  • And these funds are intended to help companies maximize the scale of their projects. This means, that if a company already has funding for a $10 billion project, we’d like them to think bigger and tell us how our funds can help them achieve a $50 billion project.
We will not hesitate to clawbacks funds if awardees fail to start or complete their projects on time or fail to meet certain commitments.

And we’re going to implement guardrails to ensure those who receive CHIPS funds cannot compromise national security by sending the latest technology overseas.
The American people are counting on us to get this right and it is a responsibility that I take very seriously.

No one has done more to revitalize American manufacturing than President Biden, and CHIPS for America is a key component of that work.

We’ll be able to jumpstart the high-tech manufacturing that will drive economic growth for decades.

We are going to create the kind of jobs that you want to see as an opportunity for Americans in the workforce today, but we’ll also create the kind of jobs that provide the future you want to see for your kids.

We are going to revitalize an innovation ecosystem that for decades has atrophied. We will add rocket fuel to our global competitiveness, ensuring that America maintains its status as a leader for generations to come.

And by investing in America’s greatest strengths – our unrivaled innovation and our diversity of talent – President Biden has outlined a vision for one of the biggest, boldest projects America has undertaken in the last 80 years.

It’s an agenda that protects our national security and provides a blueprint for long-term economic prosperity. I’m ready to get to work."
 

Top