CHIPS Act ends $6 billion in semiconductor awards

CHIPS Act ends  billion in semiconductor awards

Where the last $6 billion in CHIPS Act funds will go

The Biden administration’s CHIPS Act money rollout has so far focused on giving major awards to top companies, with just four cutting-edge semiconductor makers receiving the bulk of the $33 billion that has been allocated so far. this moment.

Now, with $6 billion left, the focus is shifting to sending smaller awards to smaller companies (dozens of them, along the supply chain).

The goal, government officials and industry experts say, is to leverage the remaining grant money to attract as much private investment as possible, while boosting supply chain resilience and economic security by funding US-based facilities in areas such as materials and packaging.

“We’re really focused on investing in the entire semiconductor ecosystem,” Michael Schmidt, director of the Commerce Department’s CHIPS Program Office, told CNBC.

That means channeling investments toward both upstream suppliers (companies that supply materials and equipment, for example) and downstream players, such as those involved in the advanced packaging that takes place after a semiconductor is produced. Schmidt said some current mature technologies, also known as legacy chip makers, will likely also receive a portion of the remaining funds.

“Once we start to rebuild that ecosystem in this country, once we start to rebuild the scale that we hope to see in this country, I think that will create continued investment, investment dynamics and will continue to make it attractive for companies to invest in the future” , he claimed.

The question of where the remaining CHIPS Act grant money will go looms large now that the Commerce Department has announced the recipients of nearly 85% of its grant money and has committed to allocating the remaining funds to end of the calendar year.

Hundreds of companies are still vying for a share of the remaining money: More than 600 initially submitted statements of interest, Commerce Secretary Gina Raimondo said in February, but so far only nine have received awards.

Intel, Taiwan Semiconductors, Samsung and Micron combined will receive almost 28 billion dollars, while Global Foundries received $1.5 billion and four smaller companies: BAE Systems, Tablet, Polar Semiconductor and Absolics – received a combined total of $392 million. Another $3.5 billion has been set aside for the “secure enclave” program, which will produce semiconductors for military use.

A general view of the Samsung Austin Semiconductor plant on April 16, 2024 in Taylor, Texas.

Brandon Bell | fake images

The set of awards announced so far highlights how the Commerce Department has focused on what is known in the industry as “initial manufacturing,” or the production of wafers themselves, said Paul Triolo, technology policy leader at the Albright Stonebridge Group. . .

Triolo attributed that focus to both “the highly political nature of the awards” and the need to show near-term progress in advanced manufacturing capability, he wrote in an email to CNBC.

But Raimondo has committed to building the US chip supply chain end-to-end by 2030. Achieving that “will require considerable juggling of awards to upstream and downstream players in the supply chain,” Triolo wrote. .

Schmidt emphasized that the Commerce Department’s focus is already on securing financing for all of those players, and that there will be “significant investments” throughout the supply chain.

Additionally, as awards announced so far have already prompted commitments from private companies to invest more than $300 billion in cutting-edge production, Schmidt said he expects “a huge amount of secondary investment” to soon benefit smaller suppliers. .

The Commerce Department has also set aside $500 million in awards specifically for companies whose projects will total $300 million or less in capital investment.

“We’ll really see those benefits across the industry,” Schmidt said. “And I still think we’re going to make very significant investments in the supply chain and really build an overall portfolio that advances economic and national security interests.”

US President Joe Biden delivers a speech at the Intel Ocotillo campus on March 20, 2024 in Chandler, Arizona. Biden announced $8.5 billion in federal CHIPS Act funding for Intel Corp. to manufacture semiconductors in Arizona.

Rebeca Noble | fake images

One of those suppliers that is in talks with the Department of Commerce for a CHIPS award is IQE, a UK-based company that produces compound semiconductor wafers for major companies like Apple.

IQE CEO Americo Lemos told CNBC that while he understands the interest in funding cutting-edge chip manufacturing to develop AI systems, funding smaller companies that play supporting roles is equally crucial to ensuring that the US chip supply chain secure. and resistant.

“We need to make sure we continually look at the supply chain as a whole, in an environment where geopolitics are not easy to address,” Lemos said in an interview.

“Of course, the industry is focused on AI, GenAI and its benefits and applications, but it is not enough to build high-performance chips,” he continued. “There is no AI without compound semiconductors; it’s very simple.”

Since remaining grant money is dwindling, upcoming grants will be smaller than the multimillion-dollar packages that have been doled out so far, Schmidt said. But for small businesses, even a modest reward could have a significant impact.

“There are a lot of things that a smaller amount of money can do for those upstream projects,” said Jimmy Goodrich, senior adviser for technology analysis at the RAND Corporation. “There’s a lot of clue left.”