The Department of Commerce released (February 28) a detailed funding opportunity plan to guide the award and distribution of semiconductor industry grant and loan/loan guarantee resources under last summer’s CHIPS and Science Act.
Under the plan, funding for companies seeking resources will be assessed based on the following program priorities:
Economic and national security priorities will receive the greatest consideration, with a focus on projects “that meaningfully increase U.S. semiconductor production and strengthen global supply chains,” as well as those which further US national security interests.
Projects have commercial viability, where the applicant company has a plan for reliable cash flows and continued company investment to ensure the commercial viability of facilities over the long term.
Projects show financial strength, including through detailed financial models for their proposed project. In this regard, companies “are directed to maximize private-sector contributions” (i.e., not rely predominately on Federal support).
Projects show technical feasibility and readiness, including a clear project execution plan, including major construction and operational milestones, construction rights and permits, including meeting environmental and permitting requirements “in a timely fashion.”
Projects commit to workforce development, including that they “must commit” to developing and maintaining a highly skilled, diverse workforce, including by outlining their plans to hire economically disadvantaged individuals.
Projects provide child care, where companies requesting more than $150 million in funding “must provide a plan for access to affordable, accessible, reliable, and high-quality child care for both facility and construction workers.”
Projects commit to broader goals, such as support for US research and development programs & facilities; create opportunities for minority-owned, veteran-owned, and women-owned businesses; demonstrate climate and environmental responsibility; invest in communities by addressing barriers to economic inclusion; and commitments to American-made construction materials.
The Department says it will “protect taxpayer resources” under the program by:
Requiring companies that receive more than $150 million in direct funding to share with the government a portion of project revenue that exceeds projections by an agreed-upon threshold. Government proceeds would be re-used by the government to further the objectives of CHIPS Act programs.
Prohibiting companies from using CHIPS funds for dividends or stock buybacks, and detailing plans for company stock buybacks over five years, including whether they intend to refrain from, or at least limit them.
Releasing funds in tranches tied to construction and operational milestones.
Company application processes begin at the end of March, and will likely be ongoing through the summer. Actual financial awards may not occur until late summer and early fall.
What is in the CHIPS law?
The core elements of the CHIPS and Science Act include:
$39 billion to "build, expand, or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packaging, or research and development," and a related $2 billion dedicated solely to related Defense-focused semiconductor efforts.
$11 billion for Department of Commerce research and development, to include creating a National Semiconductor Technology Center (NSTC)––a public-private partnership to conduct advanced semiconductor manufacturing and other specialized R&D programs.
$200 million for a CHIPS for America Workforce and Education Fund to help develop the U.S. semiconductor workforce.
A new Investment Tax Credit for semiconductor manufacturing facilities and equipment.
$1.5 billion for the Public Wireless Supply Chain Innovation Fund, to advance 5G, software-based wireless technologies, and innovations in U.S. mobile broadband.
$10 billion for Regional Technology Hubs to support regional economic development efforts around the country.
U.S. Semiconductor Manufacturing Expansion Announcements
Companies vying for CHIPS and Science Act resources will likely include companies that have already announced new and/or expanded semiconductor facilities in the United States. Some facilities are already in the process of construction. Already-announced projects include:
Taiwan Semiconductor Corporation-TSMC (Arizona)
Two chip production facilities with a $40 billion investment. The first facility will initially produce the company’s 5-nanometer chips using the company's new and advanced manufacturing process (i.e., "N4"). The facility is expected to be fully operational in 2024. The second facility will produce the company's future 3-nanometer chips, among the most advanced chips. This second facility is expected to be fully operational by 2026.
Two new chip production facilities with a $20 billion investment on an existing Intel campus in Chandler, Arizona. Production at the new facilities is expected to begin in 2024, and Intel will add 3,000 jobs. In Ohio, Intel will add two new production facilities near Columbus, Ohio, with a $20 billion investment and creating 3,000 Intel jobs. Intel indicates that the Columbus location could eventually be expanded to 8 production facilities. Production at the initial facilities could come online as soon as 2025.
Two new facilities. A $15 billion investment for a new semiconductor production facility in Boise, Idaho, producing DRAM memory chips. Initial production is expected to come online in 2025 with 2,000 Micron jobs. The company will invest $20 billion over the next ten years to design and build a memory chip “megafab” production facility in New York. The investment could increase to $100 billion over twenty years, and add a total of 9,000 Micron jobs. Construction of the initial megafab facility is expected to begin in 2024.
Texas Instruments Production Facilities (Sherman, Texas)
As many as four new semiconductor production facilities with a $30 billion investment in Sherman, Texas, producing the company’s new 300-millimeter semiconductor wafer. All facilities are expected to produce 3,000 new Texas Instruments jobs. The first facility is expected to come online in 2025.
Samsung Production Facility (Taylor, Texas)
A new production facility with a $17 billion investment for the production of “advanced logic semiconductor solutions” including for mobile, 5G, high-performance computing (HPC) and artificial intelligence (AI). Initial production is expected by the second half of 2024, and will employ 2,000 Samsung workers.
GlobalFoundries Second NY Facility (Malta, New York)
GlobalFoundries says that it plans on building a second production facility near its existing Malta, New York campus, though this may depend in part up receiving US Federal subsidies under the CHIPS and Science Act. Separately, Qualcomm announced that it would increase its planned chip purchasing from GlobalFoundries' Malta facility to $4.2 billion as part of a $1 billion production expansion plan at the existing location.
Skywater Technology (West Lafayette, Indiana)
Invest in a $1.8 billion semiconductor R&D and production facility on the Purdue University campus. The company claims that the facility will help Skywater "accelerate domestic semiconductor capabilities, ensure IP security and support a more resilient and comprehensive supply chain, providing powerful competitive advantages for its U.S. government and commercial customers."