U.S. Plans to Create Manufacturing Clusters with CHIPS Act

The U.S. plan to expand its national chip industry includes adding a minimum of two manufacturing clusters for advanced semiconductors by 2030. Commerce Secretary Gina Raimondo explained Thursday that the goal is to create chip ecosystems that group together fabrication plants, assembly plants, research-and-development labs and the suppliers to support each phase of operation. The vision is to make the U.S. “the only country in the world where every company capable of producing leading edge chips will have a significant R&D and high-volume manufacturing presence,” Raimondo said.

To achieve that goal, the government is tapping funds from the $53 billion CHIPS Act, Raimondo said in a speech at Georgetown University. The Commerce Department is expected to this week disclose further details on how firms can apply for funds.

Raimondo did not indicate where the clusters would be located, but Intel, Samsung Electronics and TSMC have already committed to substantial  investments in Arizona, Ohio and Texas.

“Intel has said it would invest $20 billion each in facilities in Chandler, Arizona, and New Albany, Ohio. TSMC has a $40 billion project under way in Phoenix, and Samsung Electronics is investing $17.3 billion in a plant in Texas,” The Wall Street Journal reports, adding that “Micron Technology Inc. and Texas Instruments also have disclosed investment plans.”

Overall, the CHIPS Act — passed with bipartisan support and signed into law by President Biden in August — has led to more than 40 projects committing nearly $200 billion, per the Semiconductor Industry Association. The CHIPS act allocates $39 billion in incentives to spur such projects and trigger creation of manufacturing facilities. CHIPS earmarks another $12 billion for research and development and workforce development.

Raimondo said the government is urging chip companies to coordinate with high schools and community colleges to prepare more than 100,000 new technicians in the next 10 years.

Raimondo pointed out that the U.S. relies on Taiwan and TSMC “for 92 percent of our most sophisticated chips,” calling that “a vulnerability that’s unsustainable.”

Georgetown’s Center for Security and Emerging Technology analyst Will Hunt told WSJ that the CHIPS incentives will allow Intel, Samsung and TSMC “to maintain or establish long-term presences in the U.S.” that will allow the country to meet its domestic needs through 2027.

Meanwhile, The New York Times writes that the possibility of receiving CHIPS funds has turned chipmakers “cutthroat” as they fight for a share. NYT writes that a PR firm that declined to name its client “accused Intel, the Silicon Valley chip titan, of angling to win subsidies under the CHIPS and Science Act for new factories in Ohio and Arizona that would sit empty.”

Inside Taiwanese Chip Giant, a U.S. Expansion Stokes Tensions, The New York Times, 2/22/23
How Microchips Migrate from China to Russia, The Wall Street Journal, 2/25/23

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