The United States is set to announce substantial chip grants by the end of March, according to insiders, with plans to allocate billions of dollars to semiconductor manufacturers to boost domestic production. The grants, including those for Intel Corp. and other chipmakers, are a crucial component of the 2022 Chips and Science Act, earmarking $39 billion in direct grants to rejuvenate US manufacturing.
Intel has indicated that the grants will play a pivotal role in determining the pace of its expansion projects, including a proposed facility in Ohio that aims to be the world’s largest. Funds are expected to extend to overseas chipmakers like Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., assisting them in financing US-based factories.
Despite the landmark initiative being signed into law over a year ago, only two small grants have been announced thus far. The initiative, aimed at addressing concerns about a concentration of production in East Asia, forms a critical part of President Biden’s economic agenda in the lead-up to the November election, promising the creation of thousands of high-paying factory jobs in new manufacturing hubs nationwide.
There are indications that the grant awards may be disclosed before President Biden’s State of the Union address on March 7. Commerce Secretary Gina Raimondo has outlined plans for approximately a dozen awards this year, including multibillion-dollar grants to support advanced chipmaking facilities. The awards, potentially a combination of grants, loans, and loan guarantees, are anticipated to cover up to 15% of project costs.
For chipmakers, these disbursements are seen as crucial in mitigating the financial impact of constructing facilities that can cost up to $30 billion and face obsolescence within a decade. Intel’s CEO, Pat Gelsinger, a leading advocate for funding, has positioned his company for a comeback, with construction plans in Arizona and Ohio, along with a new site in Germany.
TSMC, the world’s largest chip manufacturer, plans a $40 billion investment for two fabrication facilities in Arizona. However, production delays and challenges have arisen at the first site, impacting the timetable for the second facility. The decision on advanced technology within the second facility is said to be influenced by US incentives. The projects in Arizona and Ohio hold political significance, particularly in states like Ohio, where manufacturing will be a central theme in a key Senate race. Globally, governments have been advancing their own chip programs, entering agreements with industry leaders and committing to covering a significant portion of construction costs. According to the Wall Street Journal, the grants for new factories may be announced in the coming weeks.
