1/28/2024
Tech

Biden Administration to Boost Semiconductor Industry with Multi-Billion Dollar Subsidies to Top Firms.

In a significant move to strengthen the U.S. semiconductor industry, the Biden administration is poised to distribute billions of dollars in subsidies to major semiconductor companies, including Intel, Taiwan Semiconductor Manufacturing Co. (TSMC), and others. This initiative is part of the $53 billion Chips Act, a bipartisan effort aimed at reshoring the production of advanced microchips and countering the rapid growth of China's chip industry.

The urgency of this initiative is highlighted by the upcoming State of the Union address on March 7, where President Biden is expected to showcase these economic strides. With more than 170 firms having applied for funding, the focus is now on kick-starting the manufacturing of cutting-edge semiconductors crucial for smartphones, AI, and defense systems.

Intel is likely to be a major beneficiary, with ongoing projects in Arizona, Ohio, New Mexico, and Oregon totaling over $43.5 billion. TSMC is also a frontrunner with its $40 billion investment in two fabrication plants near Phoenix. South Korea's Samsung Electronics and other giants like Micron Technology, Texas Instruments, and GlobalFoundries are also in contention for these substantial grants.

While the grants are a step forward in the administration’s economic policies, concerns linger about the time it will take for these subsidized factories to become operational due to permitting and other delays. The Chips Act includes provisions for manufacturing grants, loans, loan guarantees, and tax credits, with the aim of covering up to 15% of the total cost of each project, capped at $3 billion per fabrication plant.

This move represents an early test of Washington's ability to implement industrial policy effectively, where countries like China, Japan, and Germany have more experience. The success of the Chips Act is crucial for the Biden administration as it seeks to deliver on its key economic policies ahead of the presidential elections. The administration's ability to navigate the complexities of industrial policy and environmental reviews will be critical in realizing the full potential of this significant investment in the semiconductor industry.


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