US aims to reveal grants for chip plants by March

FILE PHOTO: U.S. House Speaker Nancy Pelosi (D-CA) is embraced by U.S. Rep. Eddie Bernice Johnson (D-TX) as she signs the "Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022," following House passage of the legislation to subsidize the domestic semiconductor industry as it competes with companies in China and other countries, during a bill enrollment ceremony on Capitol Hill in Washington, U.S., July 29, 2022. REUTERS/Jonathan Ernst/File Photo

NEW YORK: The United States is aiming to announce major chip grants by the end of March, people familiar with the plans say, paving the way to send billions of US dollars to semiconductor makers in a bid to supercharge domestic production.

The awards – slated to go to Intel Corp and other chipmakers – are a central piece of the 2022 Chips and Science Act, which set aside US$39bil in direct grants to revitalise US manufacturing.

Intel has said that the grants will determine how quickly it progresses with expansion projects, including a planned facility in Ohio that would be the world’s largest.

Overseas chipmakers such as Taiwan Semiconductor Manufacturing Co or TSMC and Samsung Electronics Co also are expected to get a portion of the funds, helping them pay for factories in the United States.

The money has been slow to trickle out so far, with only two small grants announced more than a year after Biden signed the landmark initiative into law.

The effort, aimed at rebalancing what’s seen in Washington as a dangerous concentration of production in East Asia, is a key pillar of Biden’s economic message heading into the November election.

It brings promises of thousands of well-paying factory jobs in new manufacturing hubs across the country.

The timing suggests the awards may be unveiled before President Joe Biden’s State of the Union address on March 7.

Spokespeople for the White House and Intel declined to comment.

Commerce Secretary Gina Raimondo has said her agency plans to make about a dozen awards this year, including several multi-billion-dollar grants to support advanced chipmaking facilities.

The awards, which could come as a combination of grants, loans and loan guarantees, will cover up to 15% of project costs.

The Commerce Department declined to comment.

For chipmakers, the disbursements will help cushion the financial impact of building facilities that can cost as much as US$30bil and yet be obsolete within a decade.

Semiconductor companies have pledged to invest more than US$230bil in the United States in recent years, many on the explicit condition that they receive government support.

Intel chief executive officer Pat Gelsinger has been the leading industry voice lobbying for that funding. His company, once the world’s biggest chipmaker, has fallen behind rivals and a construction spree is part of Gelsinger’s comeback plan.

Intel is building or planning factories in Arizona and Ohio, as well as a new site in Germany – where Gelsinger is counting on European support.

TSMC, the world’s largest manufacturer of chips, plans to spend US$40bil to build two fabrication facilities in Arizona. But the company has delayed the start of production at both sites due to labour and cost challenges at the first one. It said recently that US incentives will help determine how advanced the technology inside the second facility will be.

The projects in Arizona and Ohio carry significant electoral weight: Biden won the first state by just 10,000 votes in 2020, and manufacturing will be a central theme of a key Senate race in Ohio.

Governments around the world, meanwhile, have been plowing ahead with their own chip programmes. Several have inked agreements with the biggest names in the industry and promised to cover as much as half of construction costs.

The Wall Street Journal reported earlier Sunday that the grants to help build new factories may arrive in coming weeks. — Bloomberg

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

Next In Business News

Genting Plantations expects demand for palm products to advance in 2024
FBM KLCI up despite market weakness, Middle East tension
Surging dollar pressures Asian FX; S.Korean won leads losses
China set to keep lending benchmark LPRs unchanged in April
Gold rises as safe-haven appeal boosted by Israel's attack on Iran
MKH Oil Palm IPO oversubscribed by 8.4 times
Bank Negara adds four companies to Financial Consumer Alert list
Nissan cuts annual operating profit estimate by 14.5% on lower sales
Oil surges as reports of Israeli strike on Iran roil markets
Bitcoin slides below US$60,000 on reports Israel strikes Iran

Others Also Read