Congress is playing a hot potato with $52 billion in chip subsidies • The Register

Senators today brought billions of dollars in US semiconductor manufacturing subsidies a little closer to reality.

After more than a year of back-and-forth debates, the Senate voted 64 to 33 to pass the CHIPS and Science Act [PDF], which aims, among other things, to strengthen domestic chip manufacturing and speed up scientific research. The bill now goes to a vote in the House of Representatives and is expected to pass.

Specifically, the $280 billion bill [PDF] frees up approximately $52 billion in subsidies – known as the CHIPS Act fund – to more semiconductor fabs on US soil.

“For many years, American semiconductor companies have led the world in both the design and manufacture of this critical technology. But the truth is our leadership is weakened,” Sen. Mark Warner (D-VA) said Tuesday in the Senate, in which he urged a quick vote on the bill.

“This funding sends the message that the United States is making a strong down payment to maintain our lead in the global technology race by preventing global supply chains from being armed against the United States or, for that matter, our allies.”

The Senate vote may be fueled in part by efforts to combat growing competition from China in the semiconductor space. Last week we learned that Chinese semiconductor giant SMIC is manufacturing chips based on a 7nm process, despite concerted efforts to prevent the foundry operator from acquiring the necessary equipment and intellectual property to do so. It used to be thought that the Chinese had only recently managed to produce 14nm chips.

The bulk of the funds provided by the law will be used to subsidize the construction of semiconductor fabs in the US, many of which are already under construction. Intel, one of the spending bill’s strongest supporters, has already delayed groundbreaking on more than $40 billion worth of new foundry capacity beyond the level of Congress, with up to $80 billion in additional investment anticipated from passage of the CHIPS depend on the law.

The heart of the problem: The Senate and House of Representatives have previously separately passed legislation allowing public investment, but have been unable to merge their versions into one bill for the President to sign into law for political reasons. Now that hurdle seems to have been cleared.

Meanwhile, Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung, the two largest foundry operators, have announced $12 billion and $17 billion factories in Arizona and Texas, respectively. And if the documents filed with the Texas auditor’s website last week hold true, Samsung’s investment in the US foundry could surpass $200 billion over the next two decades.

And that’s not counting the roughly $20 million chipmakers that are estimated to have spent lobbying for the bill’s passage.

If the deed survives the house, don’t expect immediate results. It typically takes three to five years to bring leading foundries online, and in many cases longer to fix any issues in the assembly process. So-called Copy Exact Manufacturing, where new fabs follow existing fabs, is set to ramp up faster.

In addition, these facilities are not cheap, costing around $10-$15 billion each. As a result, the first factories to be funded by this law are unlikely to make a significant dent in the global semiconductor shortage until well after the 2024 presidential election.

Reuters reports that in addition to funding domestic semiconductor manufacturing, the bill will see up to $170 billion in new spending on scientific research in the US over the next five years, mostly to outperform China. However, before these funds can be made available, an additional budget law must be passed.

Which chipmakers will benefit the most from the bill is still unclear, though Intel is likely a safe bet. ® Congress is playing a hot potato with $52 billion in chip subsidies • The Register

Chrissy Callahan

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