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As of 2020, the U.S. share of modern global chip manufacturing capacity had fallen to 12%, down from 37% in 1990, according to a report by the Semiconductor Industry Association and Boston Consulting Group.
WHO ARE THE BIG COMPANIES THAT WILL LIKELY APPLY?
Chip giant Intel Corp (NASDAQ:INTC) moved ahead with the ground breaking of a $20 billion chip factory in Ohio after the chips bill passed.
Other companies interested in the funds include GlobalFoundries Inc, which said it would accelerate expansion plans of its fabrication facility in Malta, New York, as well as SkyWater Technology Inc.
Foreign firms such as NXP Semiconductors NV (NASDAQ:NXPI), Samsung Electronics (OTC:SSNLF) Co Ltd and chip manufacturing market leader Taiwan Semiconductor Manufacturing Co have also either expressed interests or begun factory planning.
WHO WILL WIN THE FUNDS?
The Commerce Department said that it will consider applications for funding based on how much emphasis is put on research and development in the fast-innovating industry, including participating in the new National Semiconductor Technology Center, created by the CHIPS Act to spur research.
The CHIPS Program Office will give “strong preference” to projects that are largely funded with private capital.
In deciding who to grant funds to, the department will also take into account environmental factors such as whether a plant will use renewable energy. The department emphasized that it hoped that businesses owned by minorities, women or veterans would assist in building facilities and supplying them once they are up and running.
WORKING WITH ALLIES, STEERING CLEAR OF FOES:
The CHIPS Act requires companies that take U.S. funds to agree not to undertake any big expansions of overseas semiconductor manufacturing facilities in “countries of concern” such as China for 10 years, with some exceptions.
The Commerce Department said it was looking to build opportunities for less developed countries to join the chip supply chain, mentioning in particular countries in the Americas and Indo-Pacific Economic Framework for Prosperity, which includes countries like Indonesia, Singapore and Vietnam.
BIDEN TEAM WANTS ‘LARGE, SKILLED, AND DIVERSE WORKFORCE’
The Commerce Department emphasized that a goal of the initiative is to ensure that the people who build, update or expand existing facilities to make chips come from a variety of backgrounds, including minorities, women and veterans.
The department also said that the workers hired to build plants or chips should be able to join unions.
The department wants companies participating in the project to have a “robust plan” to provide for workers such things as transportation assistance and housing assistance.
Any applicant requesting more than $150 million in funding must provide a plan for access to affordable and high-quality child care for both facility and construction workers.
WHAT’S THE PLAN?
The CHIPS Program Office said it would release two more funding opportunities this year: One for semiconductor materials and manufacturing equipment facilities in late spring, and one for research and development facilities in the fall.
It said the funding could come in the form of grants, loans, and loan guarantees, with the program office to determine funding levels on a case-by-case basis. The total funding would not exceed 35% of project capital expenditures, it said.
AND WHAT ABOUT THE TAXPAYERS?
The CHIPS Program Office will require any company given more than $150 million to return money if it makes more than they projected. It will also ask for details of any planned stock buybacks and give preference to applicants who promise to limit or refrain from them.
