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Why Billions Of CHIPS Act Dollars Have Not Been Distributed

Why billions of CHIPS Act dollars have not been distributed

Why billions of CHIPS Act dollars have not been distributed

shutterstock 2190565341 Over the past 30 years, the US share of global semiconductor production has fallen from 37% to just 12%, according to White House figures. Meanwhile, China’s share of chip manufacturing has grown nearly 50% over the past two years and now makes up about 18% of the world’s supply. In 2021, the decline in domestic chip production was exposed by a worldwide supply-chain crisis that led to calls for reshoring manufacturing to the US. After more than a year of work from the Biden-Harris Administration to respond to acute semiconductor shortages, Congress in August 2022 passed the CHIPS and Science Act (CHIPS Act). The legislation provided the US Department of Commerce (DoC) with $52.7 billion for a suite of programs under the CHIPS for America program to “revitalize” the US position in semiconductor research, development, and manufacturing. [ Lessons on diversity in IT: How to hire and retain Black tech professionals — for real • 10 professional organizations focused on diversity in tech • Gender gapped: The state of gender diversity in IT • Māori participation in IT: diversity insights for CIOs everywhere ] With the CHIPS Act spurring them on, the likes of Intel , Samsung , Micron , TSMC , and Texas Instruments unveiled plans for a number of new US chip fabrication plants. (Qualcomm, in partnership with GlobalFoundries, also said it would invest $4.2 billion to double chip production in its Malta, NY facility.) An artist’s rendition of Micron’s proposed fabrication plant, to be located in Onondaga County, New York. The plant will be the size of 40 US football fields and is expected to provide close to 50,000 jobs for the region. The first round of CHIPS Act incentives totaling $39 billion for the construction of large-scale fabrication facilities became available in February. In September, a second funding opportunity for small-scale fabrication projects opened. But to date, none of the money has been distributed, and some fabrication plant projects run into hurdles. At the beginning of 2023, TSMC, the world’s largest chip maker, began construction on a second chip fabrication plant near Phoenix, Ariz. For Biden, TSMC’s two plants represented the flagship of his CHIPS Act incentive program. The TSMC project, however, stalled, and the company announced that it had pushed back its completion date from 2024 to 2025 due to problems finding skilled labor . [ REGISTER NOW for the last FutureIT event of the year! Exclusive professional development workshop available. FutureIT New York, November 8 ] While the $52.7 billion provided in incentives to chip manufacturers and researchers is nothing to sneeze at, the DoC overseeing distribution of the money said the real win will come from manufacturers’ own investments in the US economy. “We’ve seen over $230 billion in private-sector investment in semiconductor manufacturing since the beginning of this administration and over $166 billion since the CHIPS and Science Act was passed,” a Department of Commerce official said in response to a Computerworld inquiry. Micron said it may spend up to $100 billion over the next 20 years on expansions to its US facilities. TSMC had promised to make a $40 billion investment in its US chip production plant. The investment represents the largest ever foreign investment in Arizona and one of the largest in US history. TSMC manufactures about 50% of the world’s semiconductors, which it sells to other companies, such as Apple, AMD, Nvidia, and Qualcomm. In contrast, Samsung and Intel manufacture semiconductors for their own products. Taiwan and South Korea lead the world in semiconductor manufacturing with about 20% to 21% of the market each, and Japan and the European Union each produce about 9% of the world’s computer chips. The initial impact of the US CHIPS Act will take anywhere from a couple of years to the end of the decade to be realized, according to Gaurav Gupta, a vice president analyst with Gartner Research. Even with the current reshoring efforts underway, the nation’s share of chip production isn’t likely to grow more than a few percentage points by the end of the decade, according to Gupta. That’s because semiconductor fabrication plants take from three to five years to build, and then production ramps up after that. But there’s also a technology talent shortage with which manufacturers are contending. For example, TSMC’s CEO C.C. Wei said the company has already hired close to 1,100 local employees, but the company has stated it will need 4,500 high-tech workers for its two Phoenix fabrication plants. dji 0259.. TSMC […]

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Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

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