US passage of subsidies prompts chip makers to move on projects

US passage of subsidies prompts chip makers to move on projects

Several make immediate commitments.

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Major semiconductor makers on Thursday hailed passage in the US Congress of a pot of federal government money for new chip factories in the United States and said they were moving ahead on various projects that had been stalled awaiting funding.

The Chips and Science Act authorises about US$52 billion (S$72 billion) in government subsidies for US semiconductor production and research, and an investment tax credit for chip plants estimated to be worth US$24 billion.

Passed by the US Senate on Wednesday and the House of Representatives on Thursday, it was headed to President Joe Biden's desk for signing.

US semiconductor manufacturer SkyWater Technology Inc, which last week announced US$1.8 billion investment plans for a chip research and production facility in Indiana, in partnership with the state and Purdue University, immediately committed to moving forward.

“Now the chips act has passed, we will work with the State and Purdue (University) to seek the CHIPS grant funding from the US Department of Commerce that is necessary for us to move forward with groundbreaking,” said SkyWater CEO Thomas Sonderman.

Thomas Caulfield, CEO of GlobalFoundries Inc, who last week told Reuters expansion plans in its New York factory could be delayed without the chips bill, also immediately committed to building out more capacity.

"GF is already spending more than a billion dollars to expand manufacturing capacity at its campus and headquarters in Malta and is ready to accelerate its expansion plans there," Caulfield said in a statement, adding that the expansion would create roughly a thousand high-tech jobs.

Mega factory

In January, Intel Corp announced a US$20 billion investment to build a new mega chip factory in Ohio but the groundbreaking of that had been delayed to wait for the chips bills passage, Chief Executive Officer Pat Gelsinger told Reuters on Thursday.

"We are we were originally going to do that in the middle of July, and we said, 'hey, we're not going to do that until we have firmness of CHIPS Act'," said Gelsinger. "Now ... we will get a firm date for groundbreaking ASAP."

Gelsinger also said the latest down cycle in semiconductors would not delay plans for the Ohio investment.

"These are long-term capital investments. It takes us four to five years to build one of these facilities and get it up and operational," he said.

Intel on Thursday posted second-quarter earnings that missed estimates and lowered its annual revenue forecast.

Chip companies are counting on the funding for research, not just manufacturing.

Dutch NXP Semiconductors NV CEO Kurt Sievers told Reuters this week that the company would apply for grants to expand research and development in the United States, pointing out automotive and communications infrastructure as areas of interest. NXP has labs in Austin, Texas, Chandler, Arizona, and San Jose, California.

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