With $39 billion in manufacturing grants up for grabs, the race is on to get a piece of the CHIPS and Science Act. During a speech Thursday, Commerce Secretary Gina Raimondo said the department will be launching the first applications for the funding starting Tuesday.
“Folks, the stakes couldn’t be higher, could not be higher, which is why we have to win,” she said, likening the semiconductor investment and innovation she hopes it spurs to President John F. Kennedy’s space race. “This is so much more than incentivizing the creation of a few new semiconductor fabs around the country.”
But practically, her plan this decade is to get two new clusters of chip manufacturing built in the U.S. It seems likely one of those clusters will be in Arizona, where companies like Intel and Taiwan’s TSMC have pledged tens of billions in new projects.
The sophisticated semiconductor industry is largely dominated by Taiwan, and China is heavily investing in new industry growth. Semiconductors are used in all types of technology, from powering cars to hospital technologies.
When the COVID-19 pandemic shut down the world, industries from tech to automobiles severely struggled with the inability to secure enough chips for products and demand. The U.S. has eyed bolstering U.S. production ever since.
Raimondo acknowledged in her speech Thursday that there’s keen interest in finding out how the government plans to divvy up the taxpayer funds secured through the CHIPS Act, but didn’t go into more detail about which companies will benefit.
While the semiconductor industry pulled together to push the historic taxpayer investment, it’s now starting to splinter as the Biden administration prepares to dish out grants. According to a New York Times article, a public relations firm accused Intel “of angling to win subsidies under the CHIPS and Science Act for new factories in Ohio and Arizona that would sit empty.” The firm would not divulge its client.
Meanwhile, Intel, which has hosted President Joe Biden at its Ohio site, has publicly questioned how much taxpayer money should go to companies like TSMC with offshore headquarters over American companies like Intel, which is headquartered in California.
“I expect there will be many disappointed companies who feel that they should have a certain amount of money. The reality is the return on our investment here is the achievement of our national security goal,” Raimondo told reporters on Wednesday.
She said her goal is that the more than $50 billion in total federal semiconductor investment will translate to an additional $500 billion or more in private sector investment. But critics point out that with so much taxpayer money on the line, the pressure is on to make sure the funds are properly used.
