US sets guidelines for semiconductor makers seeking CHIPS Act funds

The Biden administration has initiated an application procedure with guidelines for proposals from semiconductor maunfacturers that want to take advantage of incentives offered by the US CHIPS and Science Act.

The application process focuses on furthering the Biden’s administration goals to “revitalize domestic semiconductor industry and bring supply chains back to the US,” the Department of Commerce said in a press release.

The Department of Commerce is administering the $50 billion CHIPS program to revive the US semiconductor industry, including $39 billion in incentives to expand or build manufacturing facilities. The incentives are meant meant to “restore U.S. leadership in semiconductor manufacturing, support good-paying jobs across the semiconductor supply chain, and advance U.S. economic and national security,” the Commerce Department said.

First CHIPS Act funds target building of facilities

The first funding opportunity under the CHIPS program is for  “applications for projects to construct, expand, or modernize commercial facilities for the production of leading-edge, current-generation, and mature-node semiconductors. This includes both front-end wafer fabrication and back-end packaging,” the Commerce Department said.

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

Chip shortage seen as national emergency

In a statement last year, Raimondo dubbed the semiconductor shortage caused by the pandemic an issue of “national security,” as it showed the dependency of US manufacturing on imports of chips from outside the country. Semiconductors play a significant role in military applications and are critical components in cybersecurity tools.

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

In response, the Biden administration pushed Congress to hammer together several separate bills to enact the CHIPS Act, which was signed into law by Biden in August last year. This has led several chip-making 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, manufacturing was sent overseas. For the sake of American jobs and our economy, we must make these at home. The CHIPS for America Act will get that done,” President Biden tweeted last year.

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