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United States Kicks Off CHIPS Act Funding

The target is at least two leading-edge logic clusters, among other priorities

3 min read
A woman sits in a maroon suit speaking into a microphone and gesturing.

U.S. Secretary of Commerce Gina Raimondo is in charge of the department that controls much of the CHIPS and Science Act funding.

Al Drago/Bloomberg/Getty Images

On Tuesday, the U.S. government started accepting the first round of applications for the billions of dollars of funding and incentives available to companies looking to start or expand facilities through the CHIPS and Science Act. According to the CHIPS Program Office, the government’s money will lead to at least two new large clusters of leading-edge logic fabs, expanded memory production, advanced packaging facilities, and a more resilient supply chain of semiconductors made using older technology.

The goals:

The government is shooting for at least two new large clusters of leading-edge logic fabs. By this it means multiple commercial-scale fabs owned and operated by one or more companies with suppliers, R&D facilities, and other infrastructure nearby. To date, Taiwan Semiconductor Manufacturing Co. has broken ground in Arizona, and Samsung is expanding in the Austin, Texas area. Intel plans a US $20 billion installation in Ohio. The latter should certainly qualify as “new” because there is currently no chipmaking infrastructure in the region.

The act aims for “multiple high-volume” advanced packaging facilities, and to make the United States a global technology leader in advanced packaging for both logic and memory. Much of the packaging industry is based in East and Southeast Asia today. Much of the most advanced packaging technology for logic chips, such as 3D integration, is done in semiconductor fabs.

The government also seeks U.S. fabs that produce economically competitive, leading-edge DRAM chips. Idaho-based Micron Technology recently started shipping samples of the most bit-dense memory yet, but by revenue the company is the third largest behind South Korea’s Samsung and SK Hynix. Micron has announced plans for a new DRAM fab in central New York. SK Hynix is reportedly planning a chip-packaging plant in the United States. (High-bandwidth DRAM, used in high-end servers, packages multiple memory chips in a 3D stack.)

Finally, the United States wants to boost capacity for current-generation semiconductors and those made using mature technologies. Such mature-node fabs were at the center of the chip shortage that rocked the automotive sector in 2020. At the same time, the government plans to maintain U.S. leadership in compound semiconductors, such as gallium nitride and silicon carbide, and other specialty chips.

[See NIST’s “Vision for Success” document for more details of the government’s goals.]

The money:

The act offers incentives of three types—direct funding, loans, and loan guarantees. There is $38.2 billion available in direct funding, and the government expects to fund no more than 5 to 15 percent of a project’s capital expenditure. There is $75 billion available for loans and loan guarantees, which should not exceed 35 percent of a project’s capital expenses. A separate tax credit, administered by the Treasury Department, adds to the mix.

“We want applicants to consider all of these funding types,” says Mike Schmidt, director of the CHIPS Program Office at NIST.

At least $2 billion of the direct funding is reserved for mature-node fabs and their packaging facilities. “We want to be clear that there is no risk that advanced logic will receive all” the funding, Schmidt says, adding that $2 billion “is a floor, not a ceiling.”

The strings:

The United States has attached several safeguards to its funding. For example, companies are forbidden from using it on expansions outside the United States, and they risk having to pay it back if they deal with “foreign entities of concern.” They also can’t use it to buy back their own stock or relocate an existing facility to another location in the United States (with certain exceptions).

Those receiving more than $150 million—a likely scenario for any of the major logic manufacturers, whose fabs cost billions of dollars—have some additional conditions. For example, if the company’s profit from the facility exceeds its projections by a certain threshold, they will be subject to what’s called “upside sharing.” The company will have to share some of that cash with the government, which it will use for CHIPS Act purposes.

[Most of the strings are attached here. The workforce-specific ones are here.]

The process:

The five-step process starts now. On Tuesday NIST started taking “statements of interest.” NIST officials encouraged everyone to file these so that the agency could get a sense of interest. The next step, which NIST will begin accepting on 31 March for leading-edge fabs and 1 May for everyone else, is an optional “pre-application.” These give applicants the chance to get feedback and ask questions to improve their full application, which NIST will start taking on 31 March for leading-edge fabs and 26 June for everyone else.

Once applications are received, NIST will do its due diligence and prepare the awards. The money won’t arrive as a lump sum. Instead, it will be tied to milestones.

[The “Notice of Funding Opportunity” has all the details.]

What’s next:

This week’s kickoff is “the first in a series of funding opportunities,” says CPO’s Schmidt. In late spring, a second opportunity will launch, this one aimed at suppliers of materials and chipmaking tools. And a third, potentially worth $11 billion, is scheduled for autumn to support the construction of semiconductor R&D facilities.

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