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White House releases CHIPS plan disbursement details of $50B

The CHIPS for America fund has a focus on establishing and enabling tech innovations across the US. Here’s how the money will be divided.

computer chips

The U.S. Department of Commerce recently disclosed the plan of action on how it will spend the $50 billion of the CHIPS for America fund. 

The U.S. government had decided that it will disburse the funds between makers of memory and logic who use leading-edge fabrication technologies, manufacturers of chips on mature or specialty process technologies that are used by the military or critical industries, as well as advanced R&D facilities. Each of the potential CHIPS beneficiaries will have to meet copious requirements.

There are several goals that outline the mission of the CHIPS for America program. The program will attract forefront semiconductor manufacturing to the U.S., build a top-to-bottom chip supply chain to support chip production, establish an abundance of R&D programs that will design next-generation semiconductor products and technologies in private-public collaboration, and create well-paying manufacturing jobs. 

The program is looking to build secure public and private partnerships, additionally attracting private capital to the sector.

Manufacturers of chips who use the most advanced next-generation fabrication technologies will get the primary share of the CHIPS for America Fund — an astounding $28 billion. 

In recent quarters, many companies including Intel, Micron, Samsung Foundry, and TSMC announced plans to spend hundreds of billions of dollars to build new forefront fabs in the USA. 

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Actually, Intel and Samsung have already begun building them, and TSMC is almost finished with its fab in Arizona. $28 billion will provide a great contribution and support to these companies, but it makes one wonder if it’ll be enough. 

The second category of companies to get accommodations from the CHIPS for America program are foundries and chipmakers that use existing, developed, and specialty fabrication processes to make chips for defense and commercial sectors, such as automobiles, information and communications technology, and medical devices.

Makers of those chips, as well as their OSAT partners, can mutually get $10 billion from the U.S. government under the same terms and conditions as makers of chips using leading-edge production nodes.

Supporting research and development (R&D) in the U.S. is evidently crucial in supporting local semiconductor manufacturing. Without fundamental scientific breakthroughs, there will be no new applied devices to produce. To properly manage R&D projects, the DoC split them into four major initiatives focusing on chip manufacturing, advanced semiconductor research, metrology research, and innovative chip packaging. Together, they’ll receive $11 billion in total.

To give a look into how this program will work, the DoC will have to build a mechanism to review applications and determine their benefits both in terms of technology and economics. This is because there will be tens of companies seeking government subsidies, and an effective sorting system is necessary. 

Every request will be reviewed by a team of qualified individuals. The DoC is hiring around 50 people to review technical and financial merit of submissions, the rationale for public funding, and operational capabilities of the applicant, according to NYTimes.

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The same team will monitor the usage of funds, and may recover the funds if recipients fail to initiate or complete projects on time. Recipients will be prohibited to expand or build new semiconductor production capacity in China for 10 years after getting support from the CHIPS for America fund. Using the money for stock buyback or dividend payments is also prohibited. 

Since the CHIPS for America program is designed to bring in leading semiconductor manufacturers to the U.S. and reinvigorate a reliable chip supply chain in the country, the DoC will prefer funding established players as well as R&D projects backed by reputable and private companies.

We will learn how much individual companies will get in the following months.

Macie LaCau is a passionate writer, herbal educator, and dog enthusiast. She spends most of her time overthinking and watering her tiny tomatoes.

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