With midterm elections fast approaching, the Biden administration is under pressure to reveal that it could actually use this funding correctly and lure manufacturing investments back to america. The Commerce Department is answerable for selecting which firms receive the cash and monitoring their investments.
In its strategy paper, the Commerce Department said that america remained the worldwide leader in chip design, but that it had lost its forefront in producing the world’s most advanced semiconductors. In the previous couple of years, China has accounted for a considerable portion of newly built manufacturing, the paper said.
The high cost of constructing the sort of complex facilities that manufacture semiconductors, called fabs, has pushed firms to separate their facilities for designing chips from those who manufacture them. Many leading firms, like Qualcomm, Nvidia and Apple, design chips in america, but they contract out their fabrication to foundries based in Asia, particularly in Taiwan. The system creates a dangerous source of dependence for the chips industry, the White House says.
The department said the funding aimed to assist offset the upper costs of constructing and operating facilities in america compared with other countries, and to encourage firms to construct the larger form of fabs in america which can be now more common in Asia. Domestic and foreign firms can apply for the funds, so long as they spend money on projects in america.
Sept. 6, 2022, 10:33 a.m. ET
To receive the cash, firms might want to reveal the long-term economic viability of their project, in addition to “spillover advantages” for the communities they operate in, like investments in infrastructure and work force development, or their ability to draw suppliers and customers, the department said.
Projects that involve economically disadvantaged individuals and businesses owned by minorities, veterans or women, or which can be based in rural areas, shall be prioritized, the department said. So will projects that help make the provision chain safer by, for instance, providing one other production location for advanced chips which can be manufactured in Taiwan. Firms are encouraged to reveal that they’ll obtain other sources of funding, including private capital and state and native investment.