U.S. Government Set to Unveil Substantial Subsidies for Advanced Chip Production

In the coming weeks, the Biden administration is anticipated to announce significant subsidies amounting to billions of dollars for leading semiconductor companies, including Intel and Taiwan Semiconductor Manufacturing Co (TSMC), to facilitate the establishment of new chip factories within the United States. This move aims to stimulate the production of advanced semiconductors crucial for applications such as smartphones, artificial intelligence, and defense systems.

Industry executives familiar with the negotiations revealed to the Wall Street Journal (WSJ) that the impending announcements are designed to propel the manufacturing of these critical components. Some of these announcements are expected to precede President Biden’s State of the Union address on March 7, according to the WSJ report.

Intel, a probable recipient of the subsidies, is currently engaged in projects across Arizona, Ohio, New Mexico, and Oregon, with a combined investment exceeding $43.5 billion. TSMC, another likely beneficiary, has two plants in progress near Phoenix, representing a total investment of $40 billion. Samsung Electronics from South Korea is also in contention with a $17.3 billion project in Texas.

Other prominent contenders for the subsidies, as cited by industry executives, include Micron Technology, Texas Instruments, and GlobalFoundries. The U.S. Department of Commerce, responsible for overseeing the subsidy distribution, has maintained discretion regarding potential applicants and refrained from commenting on specific timing.

A Commerce Department spokesperson emphasized the merit-based nature of the process, stating, “CHIPS awards will be entirely dependent upon which projects will advance US economic and national security.” This highlights the strategic focus on projects contributing to both economic growth and national security.

Taiwan Semiconductor Manufacturing Co (TSMC) declined to provide comments, while Intel did not respond to requests for statements. In December of the previous year, U.S. Commerce Secretary Gina Raimondo had announced plans to make numerous funding awards for semiconductor chips, with multi-billion dollar announcements anticipated within the next year. The “Chips for America” subsidy program, approved by the U.S. Congress in 2022 with a budget of $39 billion, aims to bolster domestic chip production.

The initial award under this program, announced in December, allocated over $35 million to a BAE Systems facility in Hampshire, focusing on chip production for fighter planes. As the semiconductor industry continues to gain strategic importance, these subsidies are poised to play a crucial role in shaping the landscape of U.S. chip production and global technological competitiveness.

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