In August 2022, the CHIPS Act was signed into law with the goal of enhancing US semiconductor manufacturing capabilities. The focus is not only on commercial benefits but also on strategic reasons, such as reducing dependence on Asian manufacturing. Recently, significant amounts of money have been allocated to attract chipmakers to establish their operations in the US. Companies like Samsung, Intel, and TSMC are slated to receive grants and subsidies totaling billions of dollars. According to Bloomberg, Samsung is in line to secure $6 billion, TSMC over $5 billion, and Intel as much as $10 billion in federal funding.
Samsung is currently constructing a 4nm EUV manufacturing facility in Texas, with plans to commence operations by 2025. Originally estimated at $17 billion, the cost has now escalated to $25 billion due to inflation and increased labor expenses. While it might be expected for Samsung to utilize the incoming funds to offset this rise in costs, there are indications that the company intends to expand beyond its Texas operations, although specific details are currently unknown. Intel is also investing in facilities near Columbus, Ohio, and has expanded its Arizona operations, including the recent opening of its Fab 9 plant in New Mexico. However, the Ohio plant has faced delays, making the CHIPS Act funding a timely boost to its progress.
On the other hand, TSMC has earmarked $5 billion out of its planned $40 billion US investment. Despite ongoing construction at its Arizona facility, the company has encountered delays. TSMC Chairman Mark Liu has expressed the need to evaluate the incentives provided by the US government, hinting at a potential negotiation for further support. The slow distribution of CHIPS funding has contributed to delays in some projects, highlighting the importance of timely financial support to keep momentum in the semiconductor industry.
As billions of dollars in CHIPS grants and loans are set to be dispersed, the question arises whether this financial assistance will genuinely incentivize chipmakers to sustain long-term investments. While the infusion of funds is welcomed by the industry, the overall cost of establishing cutting-edge semiconductor facilities raises doubts about the adequacy of the incentives provided. The response of chipmakers to the CHIPS Act funding will be crucial in determining the trajectory of US semiconductor manufacturing and its competitiveness on a global scale.
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