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Biden Administration announces strategy for $50 billion CHIPs Act spending

Earlier this week, the US Department of Commerce outlined plans for a rollout of $50 billion in funding for domestic semiconductor chip manufacturing as part of the CHIPs Act signed last month. The funding will be used to accelerate microchip and semiconductor manufacturing in response to a global shortage that has affected the automotive industry since the pandemic’s start.

Currently, the US consumes around 30% of mature chips while producing only 13%. The goal of the funding is to change that percentage. Microchip shortages over the last two years have impacted automakers, causing demand to outpace supply as nearly finished vehicles awaited necessary chips. Chip shortages have also pushed up prices.

Gina M. Raimondo, US Secretary of Commerce

“With this funding, we’re going to make sure that the United States is never again in a position where our national security interests are compromised, or key industries are immobilized due to our inability to produce essential semiconductors here at home,” said Commerce Secretary Gina Raimondo.

Around $28 billion of the funding is marked for large-scale investments in leading-edge chips used in electronic devices. $10 billion will go to mature and current-generation chips for vehicles and medical devices.

The remaining $11 million is set aside for research and development initiatives and the creation of a National Semiconductor Technology Center. This public-private organization will focus on advancing semiconductor design, scaling manufacturing processes, and developing a workforce.

The funding passed with bipartisan support but faced some pushback from lawmakers who feel it represented a handout to already successful companies. Raimondo underscored protections put in place, like the agency’s ability to “claw back” money from companies that fail to meet project goals. Companies are also barred from making business investments in China and prohibited from sending the newest technology overseas.

Companies that apply for funding must provide financial disclosures and capital investment plans that demonstrate the funding is “absolutely necessary to make these investments.”

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