President Donald Trump has announced a 100% tariff on foreign-made semiconductors — a bid to force companies to build chips in the United States or order them from local fabs.

Trump made this announcement at the Oval Office after Apple’s Tim Cook promised an additional $100 billion in investments to avoid chip tariffs for iPhones, according to the Associated Press.

“We’ll be putting a tariff of approximately 100% on chips and semiconductors. But if you’re building in the United States of America, there’s no charge,” Trump said. When a reporter asked him how all of these announced investments would impact the American people, the president answered, “We have the biggest chip companies — the both of them — but we have the biggest in the world coming in. They’re going to Arizona and beyond. And in a short period of time, we’ll be [making] up to almost 50% of the chips, starting from nothing.”

TSMC has already started production at its Arizona fab; Apple, one of its first customers, expects to source over 19 billion chips from local manufacturing. The chip maker says demand for its capacity is so high that it’s already sold out through 2027, meaning companies that need chips will have to find another provider. Thankfully, Samsung’s new Texas fab is also nearing completion, with the company reportedly delaying its completion due to a lack of customers.

These massive new facilities were built under the Biden administration’s CHIPS and Science Act, jumpstarting the production of some of the most advanced semiconductors in the U.S. Nevertheless, Trump’s tariff threats have forced these companies and more to expand their investments, allowing him to secure about $1.5 trillion in commitments for building and expanding the chip making supply chain within America’s borders.

We’re still unsure if the output of these new fabs, and all of the existing ones, would be enough to deliver what the American industry needs, however. Aside from the massive demand brought about by the seismic AI infrastructure buildout being done by tech giants, nearly every other everyday item we take for granted now requires chips, from cars and appliances to light bulbs and switches.

If companies are forced to import chips at elevated rates, the American consumer will end up paying more, driving inflation and reducing demand. We also need to see more details about how the tariff exemptions will work. At the moment, the president says that he won’t put a tariff on companies that are buying (or building) locally-made semiconductors and importing them as well — but how many chips should a company buy and use for it to be exempted from the import tax?

U.S. President Donald Trump signed an executive order Tuesday that will create the United States Investment Accelerator Office within the Department of Commerce. According to the White House, it “shall focus on delivering the benefit of the bargain for taxpayers by negotiating much better deals than those of the previous administration.”

The order did not detail how this would affect already existing contracts and awards.

There were hints that Trump did not like President Biden’s CHIPS and Science Act strategy to get semiconductor investments into the U.S. during his campaign. This became crystal clear in his first address to Congress in March, when he told the House Speaker to “get rid of the CHIPS Act” and spend the money for it to “reduce debt or any other reason you want to.”

Aside from this, the federal government staff purge hit the CHIPS Act office just a few days before the speech, with at least two-fifths of the current staff reportedly terminated.

The White House started reviewing CHIPS Act awards in February; some people familiar with the matter said the new administration wanted to renegotiate the terms enforced under the deal to “align with President Trump’s executive orders and policies.” It’s still unclear how these reviews will affect CHIPS Act winners, but scheduled fund disbursements are expected to be delayed.

Still, it’s not all bad news for the semiconductor industry. The setting up of the U.S. Investment Accelerator office implies that the White House is seemingly continuing with the CHIPS Act and that companies that expect to receive subsidies aren’t going to be completely stiffed by the new administration.

Furthermore, the executive order also directs it to assist investors for efficiency, reduce regulations, increase access to and use of national resources, facilitate research, and reduce regulatory barriers to increase investment in the United States. This new office is designed not just to release new federal funding for semiconductor investments but also to use the existing frameworks in Federal law so that anyone investing in the U.S. can take advantage of them.

Despite Trump’s criticism of the CHIPS Act, he still understands the importance of the semiconductor industry. He even had TSMC announce an additional $100 billion investment in its Arizona plant in the White House, while Congress introduced an act that would give tax credits to chip designers. The current administration says that the most advanced AI chips will be built in the U.S., and the U.S. Investment Accelerator office will likely pave the way to help massive tech companies achieve that within its borders.

Michael Grimes, a former Morgan Stanley banker who helped Elon Musk finance his $44 billion Twitter takeover, is now leading the team that’s cutting down the CHIPS and Science Act office in the Department of Commerce. This news comes days after reports leaked that the White House is terminating 40% of the team driving the former administration’s key semiconductor strategy. According to the Financial Times, the new administration only intended to keep five probationary staff members under the office, although resistance from other personnel brought this figure to 22.

According to the Financial Times report, the external and government affairs team under the CHIPS Act office, alongside policy advisers in its strategy division have already been let go. This culling of the CHIPS Act staff members comes weeks after President Trump's administration started reviewing CHIPS Act awards with upcoming payments possibly delayed. Furthermore, the president said in his speech to the joint session of Congress that the subsidy is a “horrible, horrible thing,” asking the speaker of the House to “get rid of the CHIPS Act.”

The president has been rumored to oppose this policy even during his campaign, instead preferring tariffs to push chipmakers to build factories in America. The CHIPS Act is largely disbursed, so we don’t expect any more companies to receive awards through the CHIPS Act. How Washington will disburse the billions of dollars that were already awarded to various companies but haven’t been released yet will ultimately become the work of the remaining 14%. After all, the president also said, “Whatever is left over, Mr. Speaker, you should use it to reduce debt or any other reason you want to.” Fortunately, the staff in charge of payouts seems to be still in place, so there’s still a chance that contracts that have already been signed will still be honored.

The tariffs President Trump has placed on China, one of the biggest sources of electronic goods for the U.S., are seemingly forcing companies to move their manufacturing bases outside of the country. TSMC has just announced an extra $100 billion investment in the country; this is on top of the $65 billion that it has already spent on putting up its Arizona fab. Aside from that, the president said that Apple is spending $500 billion to build up a manufacturing plant in the U.S., with OpenAI and Oracle also spending the same amount for AI data servers.

However, it will take several years for these investments and their associated supply chains to come online. That means the average consumer will have to deal with the increased prices brought about by tariffs in the meantime.

During President Trump’s first address to the joint session of Congress since taking office in January 2025, he said to the present senators and representatives, “You should get rid of the CHIPS Act, and whatever is left over, Mr. Speaker, you should use it reduce debt or any other reason you want to.” He also said during the televised speech that the CHIPS Act was a “horrible, horrible thing” and that the US has given “hundreds of billions of dollars, and it doesn’t mean a thing; they take our money, and they don’t spend it.”

The CHIPS and Science Act was a bipartisan bill approved during President Joe Biden’s term, and it allocated $52 billion in subsidies to companies, with Intel getting the largest award at nearly $7.9 billion. The total funding includes an additional $75 billion in low-interest loans. Other companies to get allocation from the federal government include TSMC, Micron, Samsung, Texas Instruments, and GlobalFoundries. The total awarded amount has reached $33 billion — meaning these are signed contracts that the government would likely have difficulty backing out of — and the Biden administration finalized the disbursements before it left office.

However, these subsidies aren’t cash payments that will be deposited in a company’s account immediately after receiving notice of the award. Instead, they are paid in tranches once an awardee has hit certain milestones. This is why Intel was frustrated with the delay in CHIPS Act payments, as it only received a total of $2.2 billion of the planned $7.86 billion as of January 2025.

There were rumors that Donald Trump opposed the subsidies his predecessor championed even while he was on the campaign trail. However, these weren’t substantiated then. Now that Trump is back in the White House, he prefers to impose tariffs instead of spending money to encourage chipmakers to build their semiconductor factories within the U.S.

Just hours before his speech, the U.S. imposed 25% tariffs on goods from Canada and Mexico. Trump also doubled the tariff rate placed on Chinese goods to 20%. This is why he’s pointing out that many companies announced investments within the country during the first few months of his presidency. According to Trump, a total of $1.7 trillion in semiconductor spending was announced since he came into power, citing figures from SoftBank ($200 billion), OpenAI and Oracle ($500 billion), Apple ($500 billion), and TSMC ($165 billion). We should note, though, that TSMC has already invested $65 billion in its Arizona fab and that it’s adding $100 billion more to expand it.

The tariffs that the White House is putting on goods — especially those coming from China, where many electronics and computer hardware come from — have likely spurred big companies to start moving their manufacturing operations into the U.S. Smaller companies like ASRock are also slowly moving out of China to avoid the worst of the tariffs. It will take time to move and set up manufacturing bases and supply chains, though, especially for things as complicated as chips. So, it's possible that the average consumer could have to deal with increasing prices while we wait for the factories within our borders to start churning out the chips, computer parts, and other electronic equipment we buy.

Two-fifths of the staff of the U.S. Chips Program Office, responsible for managing the Chips and Science Act, have been laid off by the Trump administration. 60 total employees will be cut by the end of today.

According to Bloomberg, 20 employees previously accepted resignations last week, with the other 40 being "probationary" employees who had begun their positions within the last two years; those probationary workers were to be terminated by the end of Monday.

It is no secret that President Trump is not a fan of the Chips Act. The law signed by the previous President Biden devotes $52 billion to investing in American semiconductor production and R&D. In response, companies including Intel and TSMC have pledged $400 billion in private investment in moving more of the supply chain to the U.S.

“The CHIPS Program Office has told us that certain conditions that do not align with President Trump’s executive orders and policies are now under review for all CHIPS Direct Funding Agreements,” shared GlobalWafers spokesperson Leah Peng. Some funding promised by the Biden-era Chips Office includes stipulations requiring allowing the unionization of chip fab workers and paid parental leave, policies outside of the Trump administration's wishes.

Rather than rely on promising grants to companies, Trump seems to prefer leveling economic tariffs to push companies into moving into the U.S. Commerce Secretary Howard Lutnick claims this strategy is what secured today's announcement of TSMC's $100 billion new investment in the United States, which includes a pledge of three new U.S. fabs.

“America gave TSMC 10% of the money to build here,” Lutnick said at today's White House press conference. “And now you’re seeing the power of Donald Trump’s presidency because TSMC, the greatest manufacturer of chips in the world, is coming to America with a $100 billion investment. Of course, that is backed by the fact that they can come here because they can avoid paying tariffs."

While the Chips Act is credited with being the driving push to revive the U.S. semiconductor industry, with the country spending more on chip manufacturing in 2024 than in the past 28 years combined, it remains to be seen what will happen to the office responsible for organizing the Chips Act's funds in the next four years. While some speculate more cuts are to come, and the Chip Office ensured that all of the budgeted money has been contracted out, more bad days may come for the Chips Act office.

At a news announcement at the White House today, TSMC CEO C.C. Wei stood next to President Donald Trump as he announced that TSMC will invest $100 billion in the United States. The new operations will primarily be in Arizona.

“The most powerful AI chips in the world will be made right here in America," Trump said. This new pledge is on top of the already existing $65 billion investment that the company has made in its existing fabs that are already putting out 4nm chips.

Trump said that the investment will go towards building three fabs, two packaging facilities, and a research and development center. Trump suggested there will be more than 20,000 jobs in and around the Arizona facilities, while TSMC's press release says it will "support 40,000 construction jobs over the next four years and create tens of thousands of high-paying, high-tech jobs in advanced chip manufacturing and R&D."

No mention was made of what nodes TSMC will be making chips on, nor how much capacity it will have. Apple, AMD, Nvidia, and Qualcomm were mentioned as potential customers.

Trump highlighted the matter of economic and national security for the United States to have advanced chips manufactured within its borders.

Although the CHIPS and Science Act helped jumpstart TSMC’s move to the U.S. during the Biden administration, commerce secretary Howard Lutnick posited that it’s Trump's tariffs that made TSMC move to the U.S.

This move will allow TSMC to diversify its production away from Taiwan, especially as the island country is often beset by natural disasters like earthquakes and typhoons. More than that, there are also geopolitical tensions with China. Fabs in the U.S. will also bring TSMC closer to its customers, and the production capacity that these news factories will deliver may already be contracted out to the companies Wei mentioned.

Not everyone will react positively to this news. Intel, which is already in deep financial trouble in the latter half of 2024, has a major competitor making chips in America with a promise of further investment. And while we don’t know yet if TSMC will manufacture its leading-edge chips, the Taiwanese government has already cleared the company to produce its 2nm chips abroad, which will likely be in Arizona.

Several sources familiar with the matter reported that the Trump White House wants to renegotiate some of the terms in several CHIPS and Science Act awards, which could delay upcoming disbursements. According to Reuters, Washington wants to assess and change some of the requirements that the previous administration applied to the grant.

“The CHIPS Program Office has told us that certain conditions that do not align with President Trump’s executive orders and policies are now under review for all CHIPS Direct Funding Agreements,” GlobalWafers spokesperson Leah Peng told Reuters. CHIPS Act awards distributed under the Biden administration often came with clauses, like requiring awardees to only use unionized labor for building out their infrastructure and to provide childcare to their workers. While it’s not clear yet what the White House wants to do, it may seem that it’s intent on making these requirements more lenient or maybe even remove them altogether, especially if they do not go in line with the direction Washington is taking.

Because of this development, the Semiconductor Industry Association (SIA) is said to be surveying its members on how they think that the CHIPS and Science Act could improve. Nevertheless, SIA Vice President of Government Affairs David Isaacs told Reuters, “It’s important both the manufacturing incentives and research programs proceed without disruption, and we stand ready to work with Commerce Secretary Nominee Lutnick and other members of the Trump administration to streamline the program’s requirements and achieve our shared goal of strengthening U.S. leadership in chip technology.”

However, aside from these potential loosening of prerequisites, sources also say that the current administration has raised concerns about CHIPS Act awardees using their subsidies to expand overseas. For example, Intel signed a $7.86 billion funding contract under the program, with the company already receiving $2.2 billion, but it still announced a $300 million investment in China to expand its packaging and testing facility there. This is in direct contravention of the CHIPS and Science Act’s purpose, which was to lure manufacturers into producing the most advanced semiconductors on American soil.

There is no clear indication yet of what changes the White House wants to implement nor how they would affect the existing contracts. This likely has several members of the semiconductor industry, especially awardees who are yet to receive their payouts, getting a bit nervous. After all, Trump has previously voiced opposition to the subsidies, instead preferring tariffs to force companies to get back into the U.S. Despite that, we’re seeing some promising signs like the Republican-held Congress introducing an act that extends tax credits to chip designers and Vice President JD Vance declaring in an international forum that the most powerful AI chips will be built in America.

The Semiconductor Industry Association (SIA) is applauding the U.S. House of Representative’s introduction of the bipartisan Semiconductor Technology Advancement and Research (STAR) Act which extends Section 48D of the CHIPS and Science Act, or the Advanced Manufacturing Investment Credit (AMIC). According to the SIA Press Release, AMIC gives an eligible taxpayer a tax credit of up to 25% of a qualified investment in an advanced manufacturing facility for semiconductors and semiconductor manufacturing equipment, but it expires by 2026. However, the STAR Act extends this and expands it to also include investments in semiconductor design.

“The CHIPS Act’s investment tax credit has been hugely successful in strengthening America’s semiconductor ecosystem, spurring substantial private investment and helping to put the U.S. on track to more than triple domestic chip manufacturing capacity by 2032, the largest percentage increase in the world. By extending the duration of the credit, the STAR Act would build on this moment by promoting further growth in chip manufacturing here in the United States,” the SIA said in its statement. It also added, “By expanding coverage of the credit to include chip design, the STAR Act would ensure the U.S. secures the economic, national security, and first-mover advantages of being the global leader in semiconductor technology.”

This CHIPS and Science Act is credited for reviving America’s semiconductor industry, with the country spending more on chip manufacturing in 2024 than in the past 28 years combined. However, it was also criticized for not going far enough in chip research and development—for example, Applied Materials was denied a $4-billion grant for its proposed R&D center in Sunnyvale, California. The STAR Act, if approved, would help remedy this, allowing research-intensive chip designs like Arm, AMD, and Nvidia do to be covered by federal investments.

There has been some uncertainty in the past weeks, especially with President Trump criticizing the CHIPS and Science Act during his second campaign. This led to several chipmakers racing for federal funding before his January inauguration. However, it seems that the Trump administration will back at least some of the previous government’s semiconductor investment strategy, giving American chipmakers some hope that they can still continue their expansion plans. Aside from that, the STAR Act’s bipartisan endorsement signals broader support for additional expansion of the U.S.’s investments in semiconductors.

The former U.S. Commerce Secretary, Gina Raimondo, has called for CHIPS Act 2, saying that American chip makers need funds to build more fabs. So, if the STAR Act passes through Congress and the Senate and gets signed into law, it gives hope for a second CHIPS and Science Act-like that will further expand American investment into semiconductors.

Donald Trump and his backers were hardly fans of the Biden administration's CHIPS and Science Act during the election campaign, yet the next U.S. government does not plan to reverse it. At least, that's the impression the next U.S. Commerce Secretary, Howard Lutnick, gave to outgoing Secretary Gina Raimondo, Bloomberg reports.

Before the election, Trump criticized the CHIPS Act, labeling it highly flawed and proposing tariffs as an alternative. But Lutnick, his chosen appointee for the position who will inherit program management from Raimondo, has indicated that he plans to continue with its implementation.

In a recent meeting with Raimondo, Lutnick expressed his commitment to the CHIPS and Science initiative, according to remarks Raimondo shared during a staff gathering last week, published by Bloomberg. Neither the Commerce Department nor Trump's transition team, responded when asked for clarification.

The $52 billion CHIPS and Science Act, launched under President Joe Biden to revitalize U.S. semiconductor manufacturing, is now transitioning to Donald Trump's administration. With $39 billion in grants already allocated and over $450 billion in private investments spurred, the program does not seem like a failure. Indeed, its progress is evident: Intel, GlobalFoundries, TSMC, Texas Instruments, and Samsung Foundry are building massive fabs in the U.S. While both Intel and Samsung faced some setbacks, both are committed to invest in America.

But while the new Commerce Secretary reportedly plans to continue the CHIPS and Science program, other people in Trump's team are not very fond of the initiative.

Vivek Ramaswamy, who is going to co-lead Donald Trump's Department of Government Efficiency (DOGE) presidential advisory commission with Elon Musk next year, criticized the Biden administration's approach to distributing multi-billion grants to semiconductor manufacturers weeks before Biden's tenancy is over, reports Politico. He called the action 'inappropriate' ahead of the power transition and threatened DOGE review of the funding contracts as well as other initiatives of the current administration.

"Wasteful subsidies under the IRA and CHIPS Act are being rapidly pushed out before January 20," Ramaswamy wrote in an X post a couple of months ago. "DOGE will review every one of these 11th-hour gambits and recommend that Inspectors General scrutinize these last-minute contracts. Political appointees who go on to work for beneficiaries of this midnight spending spree should be exposed unsparingly."

In the weeks following the election, over $16 billion in funding contracts were awarded to five semiconductor companies, including BAE Systems, GlobalFoundries, Intel, Rocket Lab, and TSMC as chipmakers raced to ink their deals with the U.S. government and get their funding under the CHIPS Act. Before the election, the administration had awarded just one major contract, totaling $123 million, to Polar Semiconductor in Minnesota.

Commerce Secretary Gina Raimondo has defended the timeline, asserting it was part of the original plan under the CHIPS and Science Act. Moreover, she has denied that the timeline has been influenced by any potential policy reversals under the next administration.

GlobalFoundries announced that it will build an advanced packaging and testing facility at its Malta, New York fab to support the growing demand for silicon built entirely within the United States. GlobalFoundries said that this extension will also provide assembly and testing for silicon photonics, a tech that combines optical and electrical components to deliver better efficiency and performance than chips that rely just on silicon and copper.

This facility is projected to cost $575 million to construct, and GlobalFoundries needs another $186 million for research and development costs over the next decade. However, New York state will provide up to $20 million to support this project, which is in addition to the $550 million it has already spent to support GlobalFoundries. The U.S. Department of Commerce will also give $75 million in direct funding in addition to the $1.5 billion it received from the CHIPS and Science Act.

“We’re proud to partner at the state and federal level on this new center, which is a direct response to our customers asking for more geodiversity in their supply chains and additional support with advanced packaging solutions for GF silicon photonics, Trusted, and 3D/HI offerings,” says Global Foundries CEO and President Dr. Thomas Caulfield. “The New York Advanced Packaging and Photonics Center will be unique in our industry and will play a vital role in the continued growth of the Empire State’s world-class semiconductor manufacturing and innovation ecosystem.”

The construction of an advanced packaging facility within the United States is crucial for the country’s target of silicon independence. Currently, most of these activities happen in Asia; for example, TSMC is already producing 4nm chips at its Arizona fab, but it still needs to ship them back to Amkor in Taiwan for packaging until the latter completes its own nearby facility.

A GlobalFoundries packaging facility in New York helps ensure chip security because the silicon wafers never leave American borders. More importantly, it is an American company and a trusted U.S. Department of Defense supplier. This makes it a great candidate for producing the advanced chips that the U.S. military needs to maintain global technological supremacy.

The Chinese Ministry of Commerce (MOFCOM) announced it has received complaints from domestic companies about unfair subsidies provided by the Biden administration to U.S. chipmakers under the CHIPS and Science Act, reports state-owned GlobalTimes. As a result, China launched an investigation into U.S. government subsidies, claiming they harm Chinese chipmakers that produce chips on mature process technologies, Reuters reports. 

The Chinese Ministry of Commerce alleges that subsidies under the CHIPS and Science Act, which allocated $52.7 billion for U.S. semiconductor production, research, and workforce development, give American companies an unfair edge. These subsidies reportedly allow U.S. chipmakers to export mature node chips to China at reduced prices, undermining Chinese competitors. 

While the aim of the CHIPS and Science Act was to bring back production of logic and memory chips on leading-edge nodes back to the U.S., the U.S. government awarded billions of dollars to companies that produce chips on specialty or mature process technologies. The list of such companies is not too long and includes contract chipmakers GlobalFoundries and SkyWater Technologies, as well as integrated device manufacturers Microchip, Polar, and Texas Instruments. While there are makers of GaN, SiC, InP semiconductors which received subsidies, the objections cited by GlobalTimes and Reuters only mention 'mature node chips.' 

To get subsidies from the U.S. government, companies must invest millions or billions from their own pocket, therefore  they don't really cut down their CapEx budgets (which could allow them to reduce costs and lower prices). So it's unclear whether the allegations of MOFCOM have merits. However, the U.S. government's subsidies are aimed to make American chipmakers bigger and more competitive in general. 

This is not something that China likes as the country has built and continues to build dozens of fabs that are focused on making chips on 28nm-class process technologies and less-advanced nodes. Most, if not all, of these fabs are constructed with significant subsidies from the Chinese government. Chips made on mature nodes tend to be very cheap, but they are essential for everyday products like home appliances and communication devices, so their addressable market is vast. 

Last year, Barclays predicted that China could expand its chip production capacity by 60% over the following three years, and the vast majority of this capacity will be dedicated to mature nodes. China is certainly interested in ensuring that those fabs have enough customers as it aims to flood the market with cheap chips designed to replace equivalents made in Europe and the U.S.

TSMC has started producing chips at its Fab 21 near Phoenix, Arizona, using its 4nm-class process technology, Commerce Secretary Gina Raimondo told Reuters. This marks the first time such a cutting-edge production node has been manufactured in the United States. The confirmation from a high-ranking official comes months after the first unofficial information emerged that the fab was mass-producing chips for Apple.

"For the first time ever in our country's history, we are making leading-edge 4nm chips on American soil, American workers — on par in yield and quality with Taiwan," Raimondo told Reuters.

According to unofficial information, TSMC's Fab 21 in Arizona is manufacturing at least three processor models: the A16 Bionic system-on-chip used in Apple's iPhone 15 and iPhone 15 Plus; the main processor of Apple's S9 system-in-package for smartwatches, which has two 64-bit cores and a quad-core neural engine; and an AMD Ryzen 9000-series CPU. These chips are produced on TSMC's 4nm-class—N4 and N4P—process technologies.

The TSMC Arizona project is instrumental to the U.S. goal of producing 20% of the world's most advanced logic chips by 2030, which the Biden administration set a few years ago before enacting the CHIPS and Science Act. TSMC's Fab 21 in Arizona produces chips for American companies in volumes (it is rumored that currently, the facility's production capacity is around 10,000 wafer starts per month), clear evidence that the initiative works.

Under the CHIPS and Science Act, the U.S. Commerce Department provided TSMC with $6.6 billion in grants and up to $5 billion in loan guarantees. The Fab 21 site will require funding of about $65 billion to include three fab modules that are set to be constructed and launched online by the end of the decade.

The first Fab 21 phase 1 module will officially start mass production using 4nm and 5nm-class process technologies. The next Fab 21 phase 2 is expected to follow in 2028 with 3nm-class process technologies. By the decade's end, TSMC expects to build its Fab 21 phase 3, which will produce chips on 2nm-class and 1.6nm-class nodes and their variations with backside power delivery.

U.S. Secretary of Commerce Gina Raimondo said in an interview that the country should focus more on investments in domestic innovation than applying bans and sanctions. “Trying to hold China back is a fool’s errand,” said the politician. She also added that the Biden administration’s CHIPS and Science Act, which led the country to spend more money on building out its chip infrastructure than the past 28 years combined, “matters more than export controls.” Nevertheless, the Wall Street Journal says President Biden still pushed for bans and sanctions against Chinese firms and even urged its allies, including the Netherlands and Japan, to stop China from acquiring advanced tech, especially those containing American tech.

“The only way to beat China is to stay ahead of them,” said Sec. Raimondo. “We have to run faster, out innovate them. That’s the way to win.” Despite the various export controls that the U.S. has applied against several Chinese companies, many of its companies are still able to procure banned chips through the black market and unofficial conduits. Aside from that, Chinese innovation is seemingly continuing, with many businesses and organizations forced to be creative in pursuing their goals despite the roadblocks posed by American sanctions.

Sec. Raimondo said these statements in the interview as President Trump is about to return to the White House in early 2025. The CHIPS and Science Act had bipartisan support when it passed Congress, and some states that are Republican strongholds have seen the benefits of the federal government’s investments. However, the incoming President was quoted saying in October, “That chip deal is so bad.” Instead of direct government funding, Trump spokesman Kush Desai said that he prefers “enacting tariffs, cutting taxes, slashing regulations, and unleashing American energy.”

Because of the uncertainty about the future of the CHIPS Act, many subsidy applicants are rushing to get their funding in place before January 20. Nevertheless, Trump plans to expedite permits for any company that plans to invest at least a billion dollars in the U.S., with some regulations and reviews potentially getting waived. This is likely the reason why SoftBank plans to invest $100 billion in AI and other technologies in the country. But even if Sec. Raimondo agrees that some regulations hold back the competitiveness of American industry, she still believes that Washington shouldn’t let companies act with impunity, even if they have a huge war chest.

Intel and the U.S. government on Tuesday officially inked funding deal. Intel will get up to $7.86 billion in funding from the U.S. Department of Commerce under the CHIPS and Science Act as well as get a $3 billion contract under the Secure Enclave program from the Department of Defense. The company is also eligible for loan guarantees and a 25% investment tax credits of qualified investment of $100 billion.

The $7.86 billion CHIPS Act funding will be used to support Intel's semiconductor manufacturing and advanced packaging projects in Arizona (where Intel's most advanced Fab 52 and Fab 62 are located), New Mexico (where Intel's most advanced packaging facilities are), Ohio (home for Intel's future fabs), and Oregon (the company's major hub for semiconductor R&D). These projects are central to Intel's plan to build and package chips using leading-edge process technologies in the U.S.

"With Intel 3 already in high-volume production and Intel 18A set to follow next year, leading-edge semiconductors are once again being made on American soil," said Pat Gelsinger, CEO of Intel. "Strong bipartisan support for restoring American technology and manufacturing leadership is driving historic investments that are critical to the country's long-term economic growth and national security. Intel is deeply committed to advancing these shared priorities as we further expand our U.S. operations over the next several years." 

Intel was supposed to get up to $8.5 billion in direct funding from the U.S. government, but after it implemented significant changes to its plans (e.g., postponed building its Ohio campus by several years) and said that demand for its products could be lower than expected in the coming years, the U.S. government also decided to lower its funding to Intel by over $600 million. 

In addition to $7.86 billion from the U.S. Department of Commerce, Intel is also set to get $3 billion from the U.S. Department of Defense to make chips for the U.S. government, intelligence and military agencies under the Secure Enclave program. The program aims to manufacture advanced chips for aerospace and other sensitive applications in secure, isolated facilities. Given the high cost of building separate cleanrooms for military-grade chips makes this approach impractical, Intel has adopted alternative methods to meet security standards. The program spans multiple states and includes Intel's Arizona site, home to the 18A-capable Fab 52 and Fab 62. 

Intel's investments in its new project will create over 10,000 jobs directly within the company, nearly 20,000 construction jobs, and over 50,000 roles in supplier and supporting industries. In addition to manufacturing, Intel is focused on workforce development, allocating $65 million to train future talent. This includes $56 million for education and training programs, $5 million for childcare near its facilities, and $4 million to promote diversity in construction. 

"The CHIPS for America program will supercharge American innovation and technology and make our country more secure — and Intel is playing an important role in the revitalization of the U.S. semiconductor industry through its unprecedented investments across Arizona, New Mexico, Ohio, and Oregon," said U.S. Secretary of Commerce Gina Raimondo. "Thanks to the leadership of President Biden and Vice President Harris, our CHIPS award is enabling Intel to drive one of the most significant semiconductor manufacturing expansions in U.S. history."

The U.S. government is scaling down Intel's proposed $8.5 billion federal chips grant to less than $8 billion, partly due to a $3.5 billion contract Intel secured to produce chips for the Pentagon, reports the New York Times. The company will still receive more money from the government than any other chipmaker funded under the CHIPS and Science Act — Intel's recent woes clearly still worry the U.S. government.

Earlier in the year, the Biden administration committed nearly $20 billion in grants and loans to Intel to help Intel expand its manufacturing operations in the U.S. The preliminary funding included $8.5 billion in grants and up to $11 billion in loan guarantees to help construct new production facilities in Arizona, New Mexico, Ohio, and Oregon. Also, the company was awarded $3.5 billion from the U.S. Department of Defense to build chips for government, military, and secret service agencies in America.

The combination of Intel's military contract and CHIPS Act funding now totals over $10 billion in federal support. However, Intel delayed its Ohio campus project, initially scheduled for completion in 2025, to the end of the decade, citing uncertainties with demand.

Consequently, the Commerce Department has expressed concerns about Intel's ability to attract sufficient demand for chips produced in the United States. To address this, Commerce Secretary Gina Raimondo has engaged companies like Apple, Google, and Microsoft to encourage their purchase of chips made in the U.S. Microsoft already has a supply contract with Intel Foundry. In contrast, Apple has almost exclusively used TSMC for years.

Also, Intel's recent struggles have raised concerns about its ability to meet the funding benchmarks set by the U.S. Commerce Department.

Intel's reduced federal grant reflects the strategic balancing of public investments in the sector. Apparently, the U.S. government believes that the Pentagon's $3.5 billion contract, in addition to a lowered grant under the CHIPS and Science Act, provides Intel with enough money to build its new manufacturing facilities.

However, it should be noted that chips for the Pentagon and secret services will be made under the Secure Enclave program, which requires Intel investments. The Secure Enclave program aims to produce state-of-the-art chips for defense and intelligence within secure environments, ideally in facilities isolated from other production. However, due to the high cost of modern fabs, building separate cleanrooms for military-grade chips is financially impractical. Intel appears to have adopted alternative methods to meet these security requirements. The program spans multiple states and includes Intel's Arizona campus, which houses the 18A-capable Fab 52 and Fab 62.

Despite the reduction, Intel remains crucial in the U.S. government's efforts to modernize and expand the domestic semiconductor industry. Intel is the only U.S. company producing chips on leading-edge nodes, so it has always been more likely to land orders from the government, which is how it got the contract with the Pentagon. The company's most advanced technology —18A — will begin mass production in 2025. It is projected to be the most sophisticated semiconductor manufacturing technology in the U.S. for quite some time, as TSMC cannot export its latest nodes overseas.

GlobalFoundries (GF) has been awarded up to $1.5 billion under the CHIPS and Science Act to expand its U.S. semiconductor manufacturing operations. The funding will be part of the company’s $13 billion investment plan to expand production capacity at its two U.S. sites over a decade. The U.S. government signed a deal with GF after the company was fined $500 million for violating U.S. export rules, as The Register noticed.

“GF’s essential chips are at the core of U.S. economic, supply chain and national security,” said president and CEO Dr. Thomas Caulfield. “We greatly appreciate the support and funding from both the U.S. Government and the states of New York and Vermont, which we will use to ensure our customers have the American-made chips they need to succeed and win.”

GF will use the funding for three major projects. The first is expanding its Fab 1 facility in Malta, New York, by installing new tools and porting various technologies from its global sites in Singapore and Germany. This will ensure a reliable supply of domestically produced chips for the U.S. automotive sector.

The second project aims to upgrade GF’s Essex Junction, Vermont, fab. The modernization will boost the capacity to produce next-generation gallium nitride (GaN) semiconductors for electric vehicles, data centers, IoT devices, and smartphones.

The third initiative involves constructing another cleanroom module at Fab 1 in Malta, New York. This new facility will manufacture chips for diverse markets, including AI, aerospace, and defense. Over the next decade, this expansion is expected to triple the campus’s chip production capacity.

The combined projects will create nearly 1,000 manufacturing jobs and over 9,000 construction roles. The investment also includes $550 million from New York State’s Green CHIPS Program and contributions from Vermont, GF’s partners, and strategic customers.

GF’s facilities in New York and Vermont are accredited under the Trusted Foundry program, ensuring secure chip manufacturing to meet the requirements of the U.S. Department of Defense and various agencies. This highlights GF’s important role in domestic chip supply.

“By investing in GF’s domestic manufacturing capabilities, we are helping to secure a stable domestic supply of chips that are found in everything from home electronics to advanced weapons systems,” said Commerce Secretary Gina Raimondo. “Thanks to President Biden’s leadership and because of CHIPS for America, we are strategically strengthening every part of the semiconductor supply chain to ensure we meet our national security objectives and can out-compete and out-innovate the rest of the world.”

It is noteworthy that recently the U.S. Commerce Department fined GlobalFoundries $500,000 for sending $17.1 million worth of chips to SJ Semiconductor, an affiliate of blacklisted Chinese chipmaker SMIC, without obtaining the required license, reports Reuters.

GlobalFoundries attributed the violation to a data-entry error made before the blacklisting and highlighted its commitment to maintaining a solid trade compliance program. The company voluntarily disclosed the issue and worked with authorities, earning acknowledgment for its cooperation.

The U.S. government has shed some light on TSMC's plans concerning the new Fab 21 complex near Phoenix, Arizona, and revealed the foundry's plans to eventually build chips on its A16 (1.6nm-class) and N2 (2nm-class) process technologies in America by the end of the decade. Also, TSMC and the U.S. government today finalized funding of TSMC's Fab 21 under the U.S. CHIPS and Science Act.

TSMC and the U.S. Department of Commerce finalized the deal under which the contract chipmaker gets $6.6 billion in direct funding and $5 billion in loan guarantees under the CHIPS and Science Act to build its Fab 21 site in Arizona. The whole campus will require funding of approximately $65 billion, includes three fab modules, and will be completely built by the end of the decade. The fabs will create over 6,000 direct manufacturing jobs and over 20,000 accumulated construction jobs.

While the formal sign-off of the agreement between TSMC and the Commerce Department is important, the preliminary roadmap outline for Fab 21 is definitely no less so. For now, TSMC is committed to make chips on its most advanced production node announced to date — A16 — in the U.S., albeit at least about three years after it enters mass production in late 2026 in Taiwan.

TSMC's 1.6nm process, like its 2nm counterparts (N2, N2P, N2X), uses gate-all-around (GAA) nanosheet transistors and adds a unique backside power delivery system dubbed Super Power Rail. This advancement boosts performance and efficiency over N2P, offering up to 10% higher clock speeds at the same voltage and 15%–20% lower power consumption at the same frequency and complexity. Also, it promises a 7%–10% increase in transistor density, depending on design.

"TSMC appreciates the continual collaboration with customers, partners, local communities and the U.S. government beginning in early 2020," said Dr. C.C. Wei, chairman and chief executive of TSMC. "The signing of this agreement helps us to accelerate the development of the most advanced semiconductor manufacturing technology available in the U.S."

The Fab 21 manufacturing site will house three fab modules each producing chips using various process technologies, as per agreement between TSMC and the U.S. Department of Commerce:

• Fab 21 phase 1: N4 and N5 (4nm and 5nm-class) and their derivatives with enhanced performance, such as N4P, N4X, 4NP. Phase 1 is set to begin high-volume production of chips in the first half of 2025. Unofficially, Fab 21 phase 1 is already making A16 Bionic processors for Apple.
• Fab 21 phase 2: N3 (3nm-class) and its versions with improved performance, such as N3E, N3P, and N3X. Phase 2 is set to start HVM in 2028.
• Fab 21 phase 3: N2 (2nm-class), and A16 (1.6nm-class) and their variations with backside power delivery as well as performance and transistor density enhancements. Phase 3 is expected to begin production by the end of the decade.

The CHIPS Program Office (CPO) will release direct funding to TSMC Arizona for project capital expenses as construction, production, and commercial milestones are reached, while loans will be provided for amounts invested in these capital expenditures.

"Today's final agreement with TSMC — the world's leading manufacturer of advanced semiconductors — will spur $65 billion dollars of private investment to build three state-of-the-art facilities in Arizona and create tens of thousands of jobs by the end of the decade," said President Joe Biden. "This is the largest foreign direct investment in a greenfield project in the history of the United States. The first of TSMC's three facilities is on track to fully open early next year […]. Today's announcement is among the most critical milestones yet in the implementation of the bipartisan CHIPS & Science Act, and demonstrates how we are ensuring that the progress made to date will continue to unfold in the coming years, benefitting communities all across the country."

Akash Systems will use CHIPS Act funds to produce diamond-cooled semiconductors for AI, data centers, space applications, and defense markets — a valuable new twist in technology.

Akash Systems has signed a non-binding preliminary memorandum of terms with the U.S. Department of Commerce for $18.2 million in direct funding and $50 million in federal and state tax credits through the CHIPS Act (h/t Axios). Although this isn’t yet a binding contract that will give the company the promised funds, it’s an important first step in the negotiation process for the Oakland-based startup, which shows that both the company and the U.S. government are gradually moving towards a formal agreement.

Diamond-cooling technology goes deeper than just thermal paste with nano-diamond technology. For example, some use synthetic diamonds as the chip substrate, utilizing the material’s thermal conductivity to more efficiently move heat away from the processor. So, let's look closer at Akash's solution.

Akash does not detail exactly how its diamond cooling technology works, but it says that it has fused synthetic diamond with conductive materials like Gallium Nitride to use it as a semiconductor. So, for starters, it could be that the company buys a GPU chip from a supplier and then mounts it on its own GaN-on-diamond PCB. Thus, in the long run, the company could produce its own synthetic diamond wafers for use in chip fabrication by manufacturers like Nvidia and Qualcomm.

Akash claims its technology can reduce a GPU’s hot spot temperature by 10 to 20 degrees Celsius, saving data centers “millions of dollars in cooling costs” while preventing thermal throttling. In the GPU-on-diamond specific slide, you can also see claims of up to a 60% temperature reduction using Akash tech, for a 40% reduction in energy consumption. For now, we have to take the numbers at face value, but its claims are quite eyebrow-raising. However, the firm's tech must have passed some scrutiny from CHIPS Act officials.

Akash Systems is also working on GaN-on-Diamond tech for radios and power amplifiers for deployment in satellites that will increase reliability and speed while reducing size.

Most CHIPS Act funding recipients are tech giants—like Intel, Samsung, and TSMC—and established semiconductor companies. Unfortunately, smaller companies and tech startups aren’t often on the list, probably because of the extensive requirements even before a company could begin an application for funding.

Axios says that Akash Systems has already secured $18 million from venture capitalists, but its CEO, Felix Ejeckam, says that the company applied for a CHIPS Act grant because the venture capital industry hasn’t always been supportive of semiconductor startups. “The CHIPS Act got started because [private investors] decided hardware wasn’t worthy enough to back, and the pandemic laid bare the problems with that,” Ejeckam told Axios. “Plus, the U.S. is trying to compete with countries like China that do lots of direct grants to build out their semiconductor and infrastructure sectors.”

The CHIPS and Science Act is indeed a massive investment push by Washington, D.C. to bolster the American semiconductor industry, with the country spending more money on chip fabs and related infrastructure in 2024 than the past 28 years combined. However, many chipmakers are getting the jitters with the upcoming change in U.S. administration, with the TSMC and GlobalFoundries racing to finalize applications and facilitate payouts. Even Akash Systems wants to fast track its progress as it hopes to break ground on its expansion activities before the year ends.

Corning is primarily known for its ruggedized smartphone glass and is barely known in the semiconductor industry. Yet its contribution to the production of chips using leading-edge technologies is rather huge. To that end, the company is eligible to get money from the CHIPS and Science Act fund. This week, Corning and the U.S. Department of Commerce inked a preliminary agreement under which Corning is set to get $32 million.

Corning makes various glass materials to build photomasks, such as high-purity fused silica, ultra-low expansion (ULE), and extreme ULE glass. A major advantage of ULE and Extreme ULE materials is their exceptionally low thermal expansion to ensure maximum consistency in harsh EUV environments (which are getting harsher as EUV tools gain more powerful light sources to increase performance) and exceptional uniformity to reduce photomask ‘waviness’ to minimize circuit variability (i.e., lower performance and power variability). 

Corning’s ULE glass is used to make photomasks for DUV and EUV lithography, whereas Extreme ULE material is projected for next-generation High-NA EUV lithography.

Ensuring that companies in America that use advanced DUV, Low-NA EUV, and High-NA EUV tools have access to materials used to make photomasks is crucial for the whole industry in general and companies like Intel, GlobalFoundries, TSMC, Texas Instruments, and Samsung Foundry.

Corning’s $32 million funding will support the expansion of its manufacturing facility in Canton, New York, to increase the production of specialized materials like high-purity fused silica (HPFS) and Extreme ULE glass. This project will add 130 manufacturing jobs and over 175 construction jobs.

“Corning is proud to be an industry leader of specialty glass and precision optical lenses for the semiconductor industry, and our Canton facility plays a vital role in the nation’s mission to strengthen the domestic semiconductor supply chain,” said Corning Incorporated Chairman and CEO Wendell Weeks. “This proposed investment and the continued commitment in Canton will enable us to establish the next-generation manufacturing capabilities needed to produce vital materials for lithography tools that will develop the world’s most complex microchips, strengthening our commitment to advancing semiconductor technology and job creation in the United States.”

TSMC and GlobalFoundries have finalized CHIPS and Science Act funding agreements with the U.S. government to support their fab projects in America, reports Bloomberg. These will be the first two major foundries to receive actual money under the CHIPS and Science Act, which marks a significant step forward both for the bill and the companies — and it comes just months before President-elect Donald Trump's second administration begins, which creates uncertainty for chipmakers that were negotiating with President Joe Biden's administration.

The finalized agreements offer GlobalFoundries and TSMC billions of dollars in grants and loans to build and expand manufacturing facilities in the U.S. TSMC's agreement includes $6.6 billion in grants and up to $5 billion in loans to develop Fab 21 in Phoenix, Arizona. GlobalFoundries will receive $1.5 billion in grants and up to $1.6 billion in loans to construct a new semiconductor production facility in New York and expand operations in New York and Vermont. The company is also set to get $600 million from the state of New York. 

This funding is part of the CHIPS and Science Act, an initiative with $39 billion designated for grants and additional loans and tax credits, aimed to bring the production of microelectronics on leading-edge process technologies back to the U.S. More than 20 companies are in line for funding under this act, but all applicants have undergone a thorough due diligence process, which has delayed some funding decisions. For example, Intel has invested about $30 billion in its American fabs over the past several but has yet to receive funding from the U.S. government. 

A portion of the CHIPS Act's funds, around $3 billion, remains unallocated and may soon be divided among companies still in preliminary negotiation stages, reports Bloomberg. 

The timing is critical as these funding decisions may transition into the Trump administration. Trump is set to take office in January. Industry representatives are pushing for swift finalization, not only to secure funding but also to prevent potential delays or policy shifts under Trump, who has recently criticized the CHIPS Act. 

House Speaker Mike Johnson (R-LA), for example, recently hinted at possible changes to the CHIPS Act and suggested 'streamlining' the program. While he clarified that a complete repeal was not the goal and that the upcoming administration understands the value of domestic semiconductor production both for economy and national security, he initially said that a repeal was a possibility.

Pat Gelsinger has expressed frustration with how slow the U.S. CHIPS and Science Act is working. The Intel CEO was speaking in an interview with the executive editor of Yahoo! Finance, Brian Sozzi. Since President Joe Biden enacted the law, Intel has invested over $30 billion in its U.S.-based manufacturing facilities while receiving zero from the American government.

"We see the CHIPS Act as a critical thing that we have invested a lot of energy to," said Gelsinger. "As we said on our [earnings] call, we are disappointed by the time it is taking to get it done: it is well over two years since the CHIPS Act passed and over that period I have invested $30 billion in U.S. manufacturing and we have seen $0 from the CHIPS grants. This is taking too long, we need to get it finished."

Indeed, since the enablement of the CHIPS and Science law, Intel has started to package chips at its advanced packaging facility in New Mexico and began to construct new fabs in Arizona and Ohio. Due to lower-than-expected demand for CPUs and a very slow start of Intel Foundry as a contract chipmaker, Intel had to delay the Ohio campus launch by a couple of years, but the company did invest a lot in its facilities in the U.S. It should of course be mentioned that Intel has already received $3 billion in Secure Enclave funding for military chips.

"That said, we are working closely with the CHIPS Office, and constructively engaging with them to finish what we started," Gelsinger said. "But I also want to point out that [the CHIPS Act contains] the grants and the tax [cuts] pieces - and tax pieces are about three times larger than the grants piece of the CHIPS Act. With that, we do see that that continues [as] part of tax law at this point, so we will still see that benefit."

While Intel has been granted some $8.5 billion in direct investment, up to $11 billion in loans, and a 25% investment tax credit of up to $100 billion, it still has to see that $8.5 billion. As a result, Intel had to ensure that it could build its fabs even without direct funding from the U.S. government. As a result, Intel kicked off its Semiconductor Co-Investment Program (SCIP), which in the case of its Fab 52 and Fab 62 in Arizona means that these production facilities will be operated by Intel, but 49% co-owned by Brookfield Asset Management.

"We have made sure that we have the financial structure that allows us to finish with or without CHIPS Act dollars," said the head of Intel. "We will make sure that we execute on the strategy that we have laid out, but we do look forward to finishing what we started with the CHIPS Act, the most important piece of industrial policy legislation in the U.S. and something we proudly participate in."

The Biden White House is investing $825 million in Albany, New York, to build the flagship facility of the National Semiconductor Technology Center (NSTC). The NSTC is America’s premier research and development center; it aims to bolster innovations in semiconductor technology, develop a skilled workforce to support these new developments, and collaborate with the private sector and academe.

The U.S. Department of Commerce says that the site will focus on extreme ultraviolet (EUV) lithography — technology for manufacturing the most advanced nodes required for the next generation of chips and processors.

NSTC’s first facility, to be called CHIPS for America Extreme Ultraviolet (EUV) Accelerator, will take shape within the Albany NanoTech Complex—a high-tech site boasting over 1.65 million square feet of space—operated by the non-profit New York Center for Research, Economic Advancement, Technology, Engineering, and Science (NY CREATES). As the name suggests, this development is funded under the CHIPS and Science Act, which is America’s most significant investment in its semiconductor industry over the past 28 years combined.

“With this first proposed flagship facility, CHIPS for America is providing access to cutting-edge research and tools to the NSTC and its launch represents a key milestone in ensuring the United States remains a global leader in innovation and semiconductor research and development,” said Secretary of Commerce Gina Raimondo.

Raimondo states that “the research and development component of the CHIPS and Science Act is fundamental to our long-term national security and ensuring the U.S. remains the most technologically competitive place on earth. Thanks to President Biden and Vice President Harris, we are not just producing the world’s most advanced semiconductors; we are building a resilient ecosystem that will power everything from smartphones to advanced AI, safeguarding U.S. national security and keeping America competitive for decades to come.”

EUV technology enables companies to push the boundaries of Moore’s Law, which states that the number of transistors in an integrated chip doubles every year. As the latest processors have already hit over 100 billion transistors on a single chip, we need further advancements in EUV lithography to allow us to pack in even more transistors in the same amount of space.

The investment comes as the U.S. aims to bolster its semiconductor supply chain to safeguard its chip sources while also fostering innovation in the semiconductor industry. Currently, the Netherlands-based ASML is the only company in the world that produces the EUV machines needed to make the latest generation of chips. The new center aims to further research and development by giving researchers access to EUV technology to help reduce the costs and time to prototype new chip designs while also fostering a semiconductor workforce. 

Intel CEO Pat Gelsinger is frustrated with the U.S. government’s slow progress in providing his company with its promised CHIPS Act funding. The New York Times shared recent interviews with Gelsinger and U.S. Secretary of Commerce Gina Raimondo about the CHIPS and Science Act.

The Biden-backed CHIPS Act represents $280 billion of funding for semiconductor manufacturing in the United States, giving the Commerce Dept. the ability to provide 10-figure grants and loans to companies like TSMC and Intel to supercharge a young U.S.-based chip industry. The Biden administration has promised Intel $8.5 billion in direct funding to build its new chipmaking fabs (plus $11 billion in loans and a 25% investment tax credit of up to $100 billion). Still, the company has not seen any of these funds so far.

Missing the funds is a problem for Intel, which is in turmoil due to $1.6 billion in losses in Q2 2024. Intel is cutting 15% of its workforce, representing 15,000 or more workers worldwide. Gelsinger has spent the past three months since the disastrous August earnings call restructuring his company and placating stockholders. He has become “frustrated” with the roadblocks the government has put in between Intel and its CHIPS Act funds.

“My simple message is, ‘Let’s get it finished,’” said Gelsinger in an interview. “There’s been renegotiations on both sides.” The U.S. government put some objectives between CHIPS Act recipients and their money, with milestones including completing building projects, securing customers, etc. “Obviously, with elections, you know, nigh in front of us, hey, we want this done,” said Gelsinger, with the possibility of a new presidential regime lighting a fire of urgency.

This reticence to give out CHIPS Act funding right away apparently stemmed from fears from the government that Intel specifically would not meet its promises. “[There is fear that] Intel is going to take chips money, build an empty shell of a factory and then never actually open it, because they don’t have customers,” said former Commerce Department official Caitlin Legacki.

Gelsinger’s tenure as CEO since 2021 has been marked by a desire to rebuild the company in a foundry-forward direction. One of the major forces behind lobbying for the CHIPS Act, Gelsinger also supercharged the Intel Foundry division, which, despite its extremely high costs, has been deemed crucial for Intel's long-term success. The foundry is set to be spun off into an independent subsidiary, with its overseas operations paused for the next two years while its U.S. facilities are prioritized.

According to reports from last month, Intel is set to receive its first round of CHIPS Act funds before the end of 2024. Gelsinger, as mentioned above, is anxious to receive funds before the election, and Qualcomm is reportedly waiting until the election to make a move on purchasing Intel assets.

Michigan-based Hemlock Semiconductor, which produces hyper-pure silicon for electronics and solar panels, received a $325 million CHIPS Act award from the Biden administration to build a new factory in the state. According to the Associated Press, this move would open short-term construction work and up to 180 manufacturing jobs in Saginaw County, Michigan, which was a key political battleground during the last two presidential elections.

A senior administration official said that the White House gave the award after it had completed negotiations with the company, with no regard for political considerations. Nevertheless, the timing seems a bit suspect, especially as we’re in the run-up to a highly divisive and hotly contested presidential election. Furthermore, political pundits say this move could give the Democrats an edge over the Republicans — especially as voting day is just two weeks away.

The CHIPS Act is the Biden administration’s investment policy in American semiconductor research, development, and manufacturing, where it has invested more in the industry in the past year versus the last 28 years combined. Aside from helping revitalize chip manufacturing within U.S. borders, the multi-billion-dollar spending and investment package is also aimed at keeping America ahead of China, especially as the latter is jockeying for influence and technological superiority on the global stage.

Aside from Michigan, Arizona is another swing state with significant CHIPS Act investments. Currently, it’s host to the TSMC Arizona fab that is expected to start production in the first half of 2025, as well as a $20-billion Intel fab that will manufacture its latest chips. Both companies are set to receive the lion’s share of CHIPS Act awards, with the former set to receive $6.6 billion and the latter $8.5 billion. Although Arizona voted for Biden in 2020, it traditionally votes Republican, so the Democrat campaign must focus on the state to win it again.

We only have a few more days before the presidential election, and many developments will follow its results. That’s because Harris, the Democrat nominee, backs Biden's investment policy, but Trump favors increased tariffs and corporate tax cuts to support chip manufacturing. Whatever the result of the November 5 election is, the new factory being built by Hemlock Semiconductor will directly benefit the people of Saginaw County and the state of Michigan as a whole.

President Joe Biden has enacted a law that exempts certain U.S. semiconductor manufacturing facilities, funded under the CHIPS & Science Act, from undergoing additional federal environmental assessments, reports Reuters. This move is intended to speed up the approval process and prevent potential delays for projects already in progress.

The new legislation prevents fab projects from being subjected to extra reviews under the National Environmental Policy Act (NEPA) 1969. Proponents of the legislation argue that these projects already comply with existing federal, state, and local environmental regulations, and the added NEPA reviews could have delayed them for years. Some environmental groups oppose the law, however, arguing that NEPA reviews are crucial for ensuring the safety of workers and communities potentially exposed to hazardous materials used in semiconductor production.

Under the new law, passed by the House of Representatives on Sept. 24, the Department of Commerce has the authority to act as the lead agency for any semiconductor project that qualifies as a significant federal action under NEPA. This centralizes oversight and simplifies the review process when the Department of Commerce approves or regulates a project. The act also lets the DoC rely on prior environmental studies, planning documents, and decisions made by federal, state, or tribal authorities. As long as these studies meet federal standards, they can be used in place of new reviews, preventing unnecessary duplication of efforts.

There are multiple conditions that fab projects must comply with to avoid NEPA review:

• Construction of the fab started or starts before December 31, 2024.
• The project is funded in the form of a loan or loan guarantee, but not a direct grant from the federal government.
• The financial assistance provided in the form of grants and excluding any loan or loan guarantee comprises not more than 10% of the total estimated cost of the project.

The first requirement is one many chipmakers are likely to fulfill, as multiple fabs, including large projects in Ohio and Arizona, are already underway. The remaining conditions will be far more difficult to achieve. Chipmakers need substantial financial assistance to build expensive fabs in the U.S.

Additional exclusions exist for projects on sites with similar construction or expansion. The sites are owned or leased by the company receiving federal financial aid. This means that companies like Intel and TSMC will not need to wait for additional environmental reviews when they expand their Arizona and Ohio sites.

Although there are now exemptions from federal environmental reviews, the White House assures these fabs will continue to meet key ecological standards, including clean water, air quality, and endangered species protections. Also, individual states have environmental regulations that will complicate the process. For instance, Micron's planned campus in New York is an exception to the new rules, as the company still needs to adhere to the permitting processes mandated by the Clean Water Act, along with various state-level environmental laws.

Discussions between Intel and Washington D.C. regarding an $8.5 billion CHIPS Act award are at an advanced stage: The company may start receiving direct funds before the end of 2024, sources familiar with the matter tell the Financial Times.

Intel is the biggest recipient of America’s largest semiconductor investment in history. But it faced funding delays as the White House reportedly wanted more information on its plans. The company recently fought financial headwinds due to a $1.6 billion loss in 2Q24.

Progress is underway, even as Intel cuts costs by slashing jobs and putting projects on hold. And with a presidential election this November, the Biden-Harris administration is likely keen to get the largest recipient of one of its headline policies moving forward. This still does not guarantee that Intel will receive its funds before 2025, however.

Officials are also concerned about whether Intel will sell any part of its business, with news that the company is considering cutting assets to stay afloat. There are also rumors that Qualcomm is interested in acquiring some parts of Intel, but sources say that such moves could derail the delicate negotiations. Even so, the company and the Department of Commerce stayed mum on the issue.

The CHIPS Act award will give Intel a much-needed cash boost, especially as the company struggles to stay afloat. In addition to the $8.5 billion in direct investment, the CHIPS Act will include $11 billion in loans and a 25% investment tax credit of up to $100 billion. The company has already received $3 billion in Secure Enclave funding for military chips. With Apollo Global Management Inc., an American asset management firm offering a $5 billion investment, Intel seems ready to turn things around.

These are all good news for Intel, but it’s still not out of the woods. Hopefully, the company could recover sooner rather than later, allowing it to regain its footing as a solid competitor in the semiconductor space.

Polar Semiconductor, a Minnesota-based manufacturer of sensor and power semiconductors, is the first company to be awarded under the CHIPS program, ahead of several other prospective recipients like Intel, Samsung, and TSMC. According to the U.S. Department of Commerce, the company will receive up to $123 million in direct funding, although the funds will be released in tranches according to completed milestones.

The CHIPS Act fund will upgrade and expand Polar’s existing fab in Bloomington, Minnesota. It is part of the $525 million investment in the company from private equity, the state government, and Washington. The company aims to double its U.S. production capacity in two years through the funding it receives from the federal government.

Aside from the new facilities, the investment will also mean that Polar is changing hands—70% of the company was previously held by Japan-based Sanken Electric Co., but the total investment will bring 59% of the company under the control of NY-based Niobrara Capital and NJ-based Prysm Capital. This turns Polar Semiconductor from just a U.S.-based foundry owned by a foreign entity into a domestic fab that is under majority U.S. control.

President Joe Biden signed the CHIPS Act into law in 2022 to help restart American semiconductor investment. Since then, the federal government has invested more in domestic chip manufacturing in 2024 than in the last 28 years combined. “Today’s announcement that the Department of Commerce has finalized the first commercial CHIPS Incentives award with Polar Semiconductor marks the next phase of the implementation of the CHIPS and Science Act, and demonstrates how we continue to deliver on the Investing in America agenda,” said Biden.

Other companies lined up to receive CHIPS Act benefits include industry giants Intel, Samsung, and TSMC. Polar’s $123 million from the federal government is just a drop compared to Intel—which is projected to receive $8.5 billion—and TSMC—which was promised $6.6 billion. However, Intel’s CHIPS Act funds are reportedly delayed as Washington asks for more information from the company, especially in light of its recent financial troubles.

As more companies receive their CHIPS Act awards, we expect domestic chip production in the U.S. to increase exponentially in the coming years. While it may take time to set up these facilities, the fact that manufacturers are now receiving funds from the federal government will help keep America in the lead of semiconductor technology in the years to come.

Intel is set to receive up to $3 billion in direct funding under the CHIPS and Science Act for the Secure Enclave program from the U.S. government, which is $500 million less than the rumored number published earlier. This initiative aims to bolster the trusted production of advanced chips on Intel's 18A process technology for U.S. government use in intelligence and military applications. 

The Secure Enclave program builds on Intel's previous collaborations with the Department of Defense (DoD), including the RAMP-C and SHIP projects. Intel's partnership with the DoD goes back to 2020 when it played a key role in the SHIP program by providing advanced semiconductor packaging. By 2023, Intel had delivered its first multi-chip prototypes, contributing to the DoD's efforts to access cutting-edge microelectronics and modernize its defense capabilities. 

Additionally, Intel has been involved in the RAMP-C program since 2021, providing commercial foundry services to develop custom circuits for critical DoD systems. Over time, Intel has successfully onboarded several defense industry partners, including Boeing, Northrop Grumman, Microsoft, IBM, and Nvidia. 

As the only U.S.-based company that both designs and manufactures advanced logic chips, Intel is crucial in ensuring the security of U.S. technological infrastructure. Through this partnership, Intel will also help the DoD enhance the resilience of vital systems with sophisticated chips made on its upcoming 18A (1.8nm-class) process technology. In fact, the award is proof that the U.S. government is confident of Intel's 18A process technology.

The Secure Enclave program is designed to manufacture advanced chips for defense and intelligence applications in the U.S. within highly secure environments. Ideally, this would take place in dedicated facilities, separate from the production of other components. However, due to the immense expense of constructing a separate cleanroom for military-grade chips (which account for 1% - 2% of revenue for foundries like Intel), Intel appears to have chosen an alternative approach to meet the security standards set by the Department of Defense. 

This new award is separate from Intel's earlier agreement in March 2024 with the U.S. government, where it secured $8.5 billion in funding and $11 billion in loans for the construction and upgrading of its commercial semiconductor facilities. Both funding deals, however, are part of the broader CHIPS and Science Act aimed at revitalizing the U.S. semiconductor industry. 

"Intel is proud of our ongoing collaboration with the U.S. Department of Defense to help strengthen America's defense and national security systems," said Chris George, president and general manager of Intel Federal. "Today's announcement highlights our joint commitment with the U.S. government to fortify the domestic semiconductor supply chain and to ensure the United States maintains its leadership in advanced manufacturing, microelectronics systems, and process technology."

Intel is reportedly facing a delay in the release of CHIPS Act funds that the White House promised to deliver back in March of 2024. Bloomberg reports that the American chipmaker must meet the expectations it agreed upon during the initial negotiations before the federal government will open its purse drawstrings. Furthermore, it must pass stringent due diligence checks to ensure that billions of taxpayer dollars won’t go to waste.

Intel is one of the biggest recipients of Biden’s push to recharge the American semiconductor industry, with $8.5 billion earmarked for Team Blue, plus another $11 billion in low-interest loans. It also received a 25% tax credit for up to $100 billion. This massive amount doesn’t come without strings attached, though — and Intel's recent turmoil has put the government on notice.

Intel’s data center CPU and foundry businesses aren’t performing as expected: the company posted a staggering $1.6 billion loss in 2Q24. This was followed up by the news that Intel will lay off 15% of its workforce—an unsettling development, especially as the CHIPS Act was designed to hire more American workers into the chip industry.

Intel’s problems were compounded when some of its shareholders sued it as its share price tanked, losing its investors over $32 billion in value practically overnight and potentially losing its place in the Dow Jones Industrial Average. The complaint said that the company hid its problems from the public, artificially causing its stock prices to inflate from January 25 to August 1.

The company is actively fighting for its survival at the moment, with its board considering cutting non-performing assets like the suspension or cancelation of its Magdeburg, Germany chip fab and selling off its stake in Altera. Massive cash inflation from any source would likely give Intel much-needed breathing room to save its core business, but it’s unlikely it will come from the promised CHIPS Act funds.

The government will only release the earmarked investments once the winner has proven it can deliver. Other winners, such as TSMC and Samsung, have already shown promising progress in their investments. For example, the former’s Arizona fab has already achieved yields similar to those of its factories in Taiwan, while the latter is considering upgrading its Texas fab to the 2nm process.

While Intel told Bloomberg that it’s still making progress in its American projects and that it’s looking forward to finalizing its agreement with the federal government, there are reports that the company wants the CHIPS Acts released as soon as possible and that it feels that Washington is drawing out the process. On the other hand, the Biden administration might be a bit wary of the adverse developments brought to light by Intel’s August 1 announcement. And given this election year, the Democrat White House would probably be more careful, as it doesn’t want to provide its political opponents ammunition to use against Harris.

The U.S. must invest in the semiconductor industry to help keep it in the lead. However, with Intel, one of its star players in the global chip race, running into trouble, it might need to reconsider its strategy and spread its investments across more companies. That way, the U.S. is not banking on Intel's success to stay ahead of the game.

Three major CHIPS Act funded projects — the Micron plant in Boise, Idaho, and the Intel and TSMC fabs in Arizona — have received draft environmental assessments from the Department of Commerce (DOC). All three drafts say that the environmental effects of these plants would be minor or that they wouldn’t have any significant impacts as long as they implement “best management practices.” However, these reports do not satisfy CHIPS Communities United, a group that aims to hold semiconductor companies accountable to their workers and communities, reports The Verge.

“These are huge projects, and they will have an environmental impact. The draft environmental assessments make assumptions about what is going to be done to mitigate those impacts, but there’s no guarantee that those mitigations will be carried out,” says Lenny Siegel, executive director of the Center for Public Environmental Oversight (CPEO) and a member of the CHIPS Communities United. The CPEO exec also added, “We aren’t objecting to the existence of these plants. We know that they’re going to have to use hazardous substances. Obviously, we’re pushing for substitutes when they can, but one of our biggest problems is the lack of transparency.”

Organizations that accept federal funds, such as those released under the CHIPS Act, are subject to federal environmental regulations under the National Environmental Policy Act (NEPA). This law requires federal agencies to execute environmental reviews and share findings with the public. And while the DOC has already released draft environmental impact statements for the three major sites, CHIPS Communities United deems them inadequate.

The group submitted its comments to the Department of Commerce demanding a more detailed environmental impact statement for all projects. They also want to know what those “best management practices” are, and how the government will monitor and enforce those standards.

Siegel understands the steps that the U.S. needs to take to remain ahead of the semiconductor industry and to achieve independence from other sources. However, they are also concerned about the toxic chemicals that semiconductor manufacturing requires and how these could impact the immediate surroundings of the fab. 

Before chip manufacturing started to be outsourced in factories abroad, many fabs were in Santa Clara County. Today, this county has more sites than any other county in the U.S., with arsenic, chloroform, lead, and many other toxic chemicals having leached into the groundwater and still requiring cleanup today.

As chip fabs are now returning Stateside, the same concerns remain in the minds of the CHIPS Communities United members. Furthermore, as semiconductor technologies advance at a breakneck speed, the chemicals required to produce them are continuously evolving. Since companies typically keep the components of these chemicals as trade secrets, the people handling them and the community surrounding the fab have often no idea what they’re dealing with.

“We also want to see workers empowered in the facilities, not just to know what they’re working with, but to have a voice in the health and safety protocols, to have the right to stop production if things are dangerous,” said CHIPS Communities United coalition director Judith Barish. “And we want to know that workers won’t be retaliated against if they speak out.”

The issues raised by the group are real and valid concerns that the federal government must address before giving the green light for these companies to operate. It’s true that the U.S. must take steps to advance local semiconductor production, but it must not rush it to the point that it will put the lives of the people in and around these plants at risk.

Texas Instruments (TI) has entered into a preliminary agreement with the U.S. Department of Commerce to get up to $1.6 billion in funding under the CHIPS and Science Act. This, along with an anticipated up to $8 billion in investment tax credits, will support the expansion of fabs in Texas and Utah and enable them to produce chips on specialty 28nm – 130nm nodes. The expansions will create thousands of jobs and strengthen the U.S. chip supply chain.

The funding will specifically support the construction of three 300mm fabs. Two phases of TI's SM fab in Sherman, Texas, (a fab that will eventually include four phases) and one in Lehi, Utah. Under the terms of the deal, TI will use money from the U.S. government to equip the cleanroom of SM1 (SM fab, phase 1), construct shell for SM2, and re-equip the Lehi, Utah, fab which TI acquired from Micron with new tools. The Texas fabs will produce analog and embedded chips using specialty 28nm – 130nm process technologies, which are essential components in a wide range of electronic devices, from cars to medical equipment.

"The historic CHIPS Act is enabling more semiconductor manufacturing capacity in the U.S., making the semiconductor ecosystem stronger and more resilient," said Haviv Ilan, president and CEO of Texas Instruments. "Our investments further strengthen our competitive advantage in manufacturing and technology as we expand our 300mm manufacturing operations in the U.S. With plans to grow our internal manufacturing to more than 95% by 2030, we're building geopolitically dependable, 300mm capacity at scale to provide the analog and embedded processing chips our customers will need for years to come."

The new fabs will be powered entirely by renewable energy and are designed to meet LEED Gold standards, which emphasize structural efficiency and environmental responsibility. 

In addition to the direct funding, TI expects to receive substantial investment via tax credits from the U.S. Treasury, further enhancing its ability to expand domestic manufacturing. This initiative aligns with TI's goal to internalize over 95% of its manufacturing by 2030, ensuring a steady supply of critical chips to customers in the U.S.

The projects in Texas and Utah are projected to create more than 2,000 new jobs directly at TI, with thousands of additional jobs generated in construction, supply chains, and supporting industries. Job creation is part of TI's broader commitment to workforce development, which includes partnerships with community colleges, high schools, and military institutions.

"With this proposed investment from the Biden-Harris Administration in TI, a global leader of production for current-generation and mature-node chips, we would help secure the supply chain for these foundational semiconductors that are used in every sector of the U.S. economy, and create tens of thousands of jobs in Texas and Utah," said U.S. Secretary of Commerce Gina Raimondo.

Applied Materials was denied funding from the U.S. CHIPS & Science Act for its proposed $4 billion research and development center in Sunnyvale, California, reports Bloomberg. This decision is significant setback to the company's efforts to establish a major facility in Silicon Valley. 

Applied Materials had been promoting this project for over a year, hoping to secure U.S. government support to build a large-scale R&D center that would develop next-generation chipmaking tools. The rejection came from the U.S. Commerce Department, which concluded that the project did not meet the necessary criteria for the funding program designed for large manufacturing projects. The Bloomberg report does not specify why Applied's project does not meet U.S. government's criteria for support; the Commerce Department didn't comment to the publication with any specificity. This could mean that makers of wafer fab equipment will unlikely get support under the CHIPS Act in general, the Bloomberg report suggests. 

Originally, Applied Materials had intended to seek funding through a separate initiative focused on commercial research and development facilities. However, this program was abandoned after disagreements within Congress and the administration over a separate focus on military chip technology. Yet, the Commerce Department has indicated that the commercial R&D initiative could be revived if additional funding becomes available. But then, efforts to increase the CHIPS Act grant program by $3 billion have stalled in Congress, casting doubt on the availability of further funding. 

There is also a separate $11 billion fund under the CHIPS Act dedicated to research and development in the semiconductor field. The Commerce Department has been working on this initiative, hosting summits and opening applications with the first awards expected in the fall. It is unclear whether the government can fund Applied under this program. 

The report says that despite many efforts conducted by the U.S. government, there are concerns about the strategic direction and leadership within the Commerce Department's R&D office. The office has faced criticism for a lack of clear strategy and has been without a designated director since December, when Lora Weiss left the position. 

In addition to funding, the Commerce Department is planning to establish government-backed entities for things like prototyping and advanced chip packaging. 

The Biden administration's CHIPS Act is pumping money into chip manufacturing construction at an historic rate. According to a recent report from the U.S. Census Bureau, the growth of computer and electrical manufacturing construction funding is so great that the U.S. government will add as much funding to the sector in 2024 alone as it did in the prior 27 years.

A recent tweet by Martin Chorzempa, Senior Fellow at the Peterson Institute, called attention to the surge and illustrated the meteoric spending growth of the last few years. (Be sure to expand the embedded tweet to see the full graph.) Note that the numbers shown represent realized spending numbers on construction — not just budgeted prices.

The construction growth began in 2021, but its explosive boom is due to a massive boost in funding from the CHIPS and Science Act, the Biden administration's $280 billion spending package passed in 2022. The act was signed to help bolster the U.S. semiconductor industry, which accounted for effectively 0% of all advanced-process chips manufactured worldwide. Companies including Intel, Samsung, and Micron have all received billions of dollars to build new manufacturing plants in the United States. Domestic research and development is also a major focus of the funding package.

The construction funding is making a major impact on the United States' projected chip production. A recent Semiconductor Industry Association study found that the United States is due to triple its domestic chip manufacturing capacity by 2032, and is expected to be producing 30% of the world's leading-edge chips by the same year. This expectation exceeds even the government's inflated goals; U.S. Commerce Secretary Gina Raimondo boldly proclaimed a goal of 20% of the world's leading-edge chips just in February, which is now expected to be far exceeded.

Construction on most of the new plants is ongoing, like Intel's new Ohio campus which is taking over roads with its 900,000-pound loads. Intel's Ohio plant and many of its counterparts will be major players on the chip fabrication scene, with leading-edge chip process development expected to finally come to the United States, a step up from the larger and simpler processes typically relegated to U.S. fabs. 

For all its expense, most of the fab construction across the country is experiencing major delays: Samsung, TSMC, and Intel are all a year or more behind schedule. This has been primarily blamed on poor regulations and makes the U.S. one of the slowest countries at chip fabrication construction in the world.

Global semiconductor trade group SEMI is applauding the U.S. Senate’s plans to solve the funding gap in the 2022 CHIPS Act. The shortfall stems from a $3 billion military chip contract with Intel, for which the U.S. Department of Defense was slated to pay $2.5 billion. However, the agency later reneged on its funding commitment, leaving the Commerce Department holding the bag. The additional funds will come through the Spectrum and National Security Act, currently at its second reading at the Upper House. This bill will allow the FCC to auction off licenses in the 12.7 to 13.25 GHz frequency bands, and the proceeds will then be used to fund various government tech programs, including the CHIPS and Science Act.

This is crucial for the CHIPS Act, as its $39 billion allocation for domestic manufacturing is already being stretched as it is. Intel will receive a $10 billion payout from the CHIPS Act, more than 25% of the fund’s manufacturing budget. In addition, the company was set to receive an additional $3.5 billion to build defense chips for the American military. This was supposed to be split between $1 billion from the Department of Commerce, with the Pentagon footing the remaining $2.5 billion.

However, the U.S. Department of Defense unexpectedly pulled out of its two-and-a-half billion-dollar commitment to Secure Enclave, meaning the Department of Commerce is left holding this massive bag. This adds to the strain on the CHIPS Act funding, especially as the requested grants and other monetary support for building fabs have already reached $70 billion — almost double the budget set by Washington.

If the Spectrum and National Security Act passes into law, it will cover the unexpected shortfall in the factory funding caused by the Pentagon’s pullout. Furthermore, it will add an extra $5 billion for research and development covered by the CHIPS Act. While these may look like a drop in the bucket with the CHIPS Act’s total budget of $280 billion, the White House feels that it’s not enough for the U.S. to retain global semiconductor leadership, with Commerce Secretary Gina Raimondo calling for CHIPS Act 2.

The U.S. needs to pour more effort and resources into chip development, especially as China pours money into its domestic chip production. While America’s bans and sanctions have negatively affected Chinese ambitions in semiconductor supremacy, history has taught us that these are not quite effective at curtailing progress. It may cause a temporary disruption, but human ingenuity and creativity could allow China to catch up nonetheless. So, if the White House wants America to maintain its leadership in the semiconductor space, it needs to pour billions (or even trillions) into it.

U.S. President Joe Biden has announced sweeping tariff increases across several Chinese imports, notably semiconductors, electric vehicles, batteries and battery components, solar cells and many components that make up our tech. According to a White House press release, tariffs on Chinese semiconductors will increase from 25% to 50% in 2025, effectively doubling its tax rate.

The semiconductor industry is seen as critical for any modern society to function, with appliances as simple as microwaves to advanced autonomous military drones and everything in between requiring them. The U.S. also sees it as a strategic resource: U.S. Commerce Secretary Gina Raimondo told the U.S. Congress that a Chinese seizure of TSMC, the largest semiconductor manufacturer globally and supplier of 92% of the chips in the United States, would devastate the U.S. economy.

The U.S. is making moves to bring itself back to the forefront of semiconductor technology. It passed the CHIPS Act in 2022, which allocates $280 billion to spur the growth of American semiconductor companies like Intel and to entice international companies like TSMC to set up shop in the U.S. Raimondo is even calling for a second round of investments to help keep America in the lead, especially as China combats U.S. sanctions by massively increasing its legacy chip production.

America’s move to block technology transfers to Chinese tech firms has also pushed the latter to develop homegrown alternatives. For example, the Netherlands prevented ASML from exporting its advanced lithography equipment to China, technology that is used to create high-tech chips. Chinese President Xi Jinping then told the Dutch Prime Minister that China did not need ASML for its technological progress. Soon after, Chinese firm Naura Technology announced that it was jumping into the lithography tools market, alongside Shanghai Micro Electronics Equipment Group (SMEE).

China will not take these new tariffs lying down, especially as it contends against the U.S. for global power. Liu Pengyu, a spokesperson for the Chinese Embassy in Washington, said, “We hope the U.S. can take a positive view of China’s development and stop using overcapacity as an excuse for trade protectionism.” While China has yet to respond to these new tariffs, Liu noted that China is a huge export market for American soybeans — and Tesla sold hundreds of thousands of cars there in 2023.

Although most trade and labor leaders, and many Democrats in the Senate and Lower Houses, praised Biden’s move, there were a few objections. David French, the executive VP for government relations for the National Retail Federation, said, “As consumers continue to battle inflation, the last thing the administration should be doing is placing additional taxes on imported products that will be paid by U.S. importers and eventually U.S. consumers.”

Colorado’s Democrat Governor Jared Polis also tweeted on X, “This is horrible news for American consumers and a major setback for clean energy. Tariffs are a direct, regressive tax on Americans and this tax increase will hit every family.” On the other hand, the Republican National Committee is saying that Biden isn’t tough enough on China, and that his announcement is just “a last-minute election year ploy to gaslight voters into thinking he is tough on China.”

Whether this move is based on policy or a political act to gain votes for Biden in the upcoming U.S. presidential election, the new tariffs will increase the prices of semiconductors and several other high-tech goods across the board. This is just the latest move in the on-going trade war between both countries, especially as the U.S. has a trade deficit with China amounting to over $250 billion.

We have yet to see how this trade war will affect American technology, but China has taken leaps and bounds in developing its own tech. Despite the numerous sanctions that prevent Chinese companies from acquiring technology from the U.S. and its allies, the Chinese government is continually pushing for developments in this space that could eventually make it a leader — with or without the input of American tech.

The U.S. government has announced that it is looking for an organization to lead in creating a new institution to study "digital twin" technology, offering $285 million in CHIPS Act funding to the winning bid. The Biden administration is looking for the potential of digital twins to supercharge the United States' semiconductor manufacturing, but the technology has near-limitless possible applications. 

A digital twin is a true-to-reality virtual representation of a real-world physical system, continually updated and exactly modeling real behaviors and actions. Today, the technology is closest to actualization in the automotive industry, where manufacturers are experimenting with digital twins of assembly lines to explore alternative production modes and processes without harming real-world productivity. The CHIPS for America initiative likely seeks to use this idea for semiconductor fabs, experimenting with alternative production styles to give domestic fabs an edge over international competitors. 

The project, named CHIPS Manufacturing USA, will hold an informational conference online on May 8th on the initiative for prospective bidders. The full NOFO (notice of funding opportunity) mentions that the project will also focus on the "development, validation, and use of digital twins for semiconductor manufacturing, advanced packaging, assembly, and test processes." The facility will be open to selected domestic companies for workforce training and collaboration on digital twin tech in a safe environment without the risk of copyright infringement. Those entities (including universities, companies, nonprofits, and state governments) interested in the development and creation of the institute have until June 20th to submit their proposals. 

The clear frontrunner in digital twin technology today is Nvidia, which is already advertising its hardware's ability to make digital twins possible. After claiming in a 2021 blog post that the digital twin market would be worth $86 billion by 2028, Nvidia has been bullish on the new technology. It stands ready to profit majorly from its proliferation, with Nvidia reaching an all-time high per-annum sales in 2023 at $60.9 billion and expecting to grow further as demand for A.I. computing has "reached the tipping point," according to CEO Jensen Huang. From its A.I. Eos supercomputer to its new Blackwell architecture, Nvidia is fully cornering the A.I. market. It will likely continue market dominance with no competitors in sight as digital twin research picks up from the government. 

The 2022 CHIPS and Science Act continues to make significant waves across the tech industry, with the Biden administration seeking to on-shore 20% of leading-edge chip production by 2030. This ambitious goal is backed by the CHIPS Act's $114 billion in promised grants and loans, and more may soon follow; U.S. Commerce Secretary Gina Raimondo has recently said that a CHIPS Act 2 may soon be necessary as the world's supercomputing giants demand even more funding. Perhaps a CHIPS Act 2 will bring with it more conditional rewarding of funds; TSMC's Biden-backed Arizona fabs currently report worker abuses propagated from the top levels of leadership.

Micron is set to receive $6.1 billion in grants from the U.S. Commerce Department under the CHIPS and Science Act, according to Bloomberg. The money will be used to build a massive DRAM fab that will make memory chips on a EUV-based process technology and is set to come online by the end of the decade. There are also plans for a brand-new fab complex in the state of New York over the next 20 years. 

Micron has rather massive expansion plans both worldwide and the United States. In the U.S., Micron broke ground on its $15 billion EUV DRAM fab near its headquarters in Boise, Idaho, back in late 2022. The semiconductor production facilities will be one of the largest DRAM plants in the world. In 2022, the company also announced plans to build a $100 billion fab complex consisting of four modules in New York state over the next 20 years. The fab complex is expected to produce DRAM, 3D NAND, and novel types of memory that may not even exist just yet. 

"New federal funding from President Biden’s CHIPS and Science Act will help lock in 50,000 jobs, a $100 billion investment and millions of dollars in community benefits," said Kathy Hochul, New York Governor, in a statement published by Bloomberg. 

Micron's receipt of the grants is contingent upon securing additional financial incentives, including investment tax credits and local subsidies, which are necessary to offset the higher costs of domestic production compared to overseas operations. The funding arrangement also includes unspecified loans, adding a layer of financial complexity to the package. 

President Joe Biden is expected to formally announce these plans during an upcoming visit to Syracuse, New York, underscoring the national importance of the semiconductor industry, the report says.  

Micron's global strategy extends beyond the U.S. as the company is maintaining and expanding facilities in Japan, Singapore, and Taiwan, where the company produces memory, as well as in China and India, where the company tests and packages its chips. Meanwhile, the U.S. government's focus remains on strengthening the domestic supply chain and reducing dependency on foreign semiconductor production.

Due to the 'overwhelming' interest in CHIPS funding, the Commerce Department has temporarily halted its plans to provide financial support for semiconductor research and development facilities, reports the American Institute of Physics. 

The Commerce Department has put a hold on its plans to offer financial support for R&D fabs. This pause is attributed to the unexpectedly high interest in the $39 billion incentive initiative under the CHIPS and Science Act, as well as changes brought by the final requisitions bill for fiscal year 2024. Despite this setback, the department remains committed to investing $11 billion in semiconductor R&D through other programs established by the Act. 

The overwhelming response for funding from the semiconductor industry has led to this strategic pause. The CHIPS Program Office, responsible for managing the incentive program, announced this decision in a newsletter. It highlighted the intense demand that far exceeded initial expectations. This demand surge reflects the semiconductor sector industry's eagerness to expand and modernize its R&D facilities with federal funding. 

In the face of this high demand, the Commerce Department has decided to continue its support for semiconductor R&D, albeit through different avenues. Specifically, it has earmarked $11 billion for R&D activities, separate from the facility incentive program. This continued investment aims to assist U.S.-based chip developers and producers even as the government reassesses its funding strategy for facility upgrades and expansions.

Commerce Secretary Gina Raimondo elaborated on the funding dilemma in a recent speech, noting the challenge in allocating the program's funds amidst requests that have significantly surpassed the available budget. 

"The bad news is that we’ve received over 600 statements of interest and the reality is that a significant majority of those who are expressing interest are not going to receive funding – including many strong proposals by excellent companies," Raimondo said. "I have also said many times that the point of this program was never to provide the semiconductor industry with every dollar it requests; it is to make targeted investments for our national security objectives. At the outset, we said that we expected to invest about $28 billion of the program’s $39 billion in incentives for leading-edge chip manufacturing. But leading-edge companies alone have requested more than $70 billion, meaning we’re having many tough conversations." 

To address these challenges and outline future directions, the CHIPS Program Office is set to host a webinar on April 9. The session will focus on the National Semiconductor Technology Center and aim to clarify the office's strategy for supporting the semiconductor industry's R&D efforts.

The U.S. government has published its five-year strategy for using CHIPS Act funds to bolster the American semiconductor industry. The 61-page paper (PDF link) outlines four key, broad goals that the National Science and Technology Council hopes to achieve within five years: speedy and successful research for future microelectronic technologies, transforming research into manufacturable products, growing and educating the semiconductor workforce, and building ties among different industry players both private and public.

The strategy paper, titled the National Strategy on Microelectronics Research, was written by the Subcommittee on Microelectronics Leadership from the National Science and Technology Council (NSTC), an organization that's part of the White House. The NSTC helps facilitate the science-related goals of the federal government and the President. Since the CHIPS Act and national competitiveness in the semiconductor industry have been a key priority of the Biden administration, it's no surprise that the NSTC published a paper on what goals it would like to meet.

A five-year-long strategy might evoke the five-year plans of China and the late Soviet Union. However, unlike those economy-focused plans, the NSTC's paper doesn't provide hard numbers it needs the industry to hit, and focuses on a wider variety of topics rather than just the economy. The NSTC describes its paper as "the framework for federal departments and agencies, academia, industry, nonprofits, and international allies and partners" that will help "shape the semiconductor field," presumably to the benefit of the U.S. and friendly countries.

Four primary goals in five years

There are four primary goals that the U.S. government wants to achieve within the next five years, which are to "Enable and Accelerate Research Advances for Future Generations of Microelectronics"; "Support, Build, and Bridge Microelectronics Infrastructure from Research to Manufacturing"; "Grow and Sustain the Technical Workforce for the Microelectronics R&D to Manufacturing Ecosystem"; and "Create a Vibrant Microelectronics Innovation Ecosystem to Accelerate the Transition of R&D to U.S. Industry."

The paper is quite long and complicated but to put it concisely, it says how the CHIPS Act's funds should be used to improve research and development (R&D), manufacturing, and education. The first goal is focused on R&D for semiconductor materials, tools, packaging, and turning "innovations into production-worthy fabrication processes." As a counterpart to goal one, goal two seeks to address the "lab-to-fab gap," as research on its own isn't very useful. In particular, the NSTC prioritizes small businesses and academia gaining access to resources necessary for fabbing and testing chips.

Education and the semiconductor industry workforce is the concern of the third goal. One part of this is getting educators and students to know about all of the different disciplines that are relevant to the field, even down to the K-12 level. The NSTC also recommends enhancing the curricula of undergraduate and graduate college students, saying "coursework is not enough."

The paper also recommends engaging with the public at large to raise awareness and curiosity in silicon, and suggests creating museum exhibits and using competitions to get the public interested. The obvious model for these efforts would be NASA, as many Americans learn from an early age about the planets, astronauts, and other space-related topics.

The fourth and final goal focuses on the semiconductor ecosystem and promoting collaboration across its various groups. The NSTC envisions deeper collaboration between entities of all sorts in the public and private sectors, including government agencies, academic institutions, and companies. The paper also puts a particular focus on assisting start-ups, as they require lots of money to get going but may not turn a profit for some time.

It's clear that the industry is currently very far from reaching the NSTC's goals outlined in the paper. Right now, most of the focus of the CHIPS Act is funding large corporations like Intel and TSMC so that their American fabs can be completed in a timely manner. Presumably, that's why the paper assumes five years will be necessary to meet all of these goals, which may be even harder and more important to meet than building fabs.

U.S. President Joe Biden and Commerce Secretary Gina Raimondo are set to announce a substantial award for Intel in Arizona next week, according to a Reuters report. This award, part of the 2022 CHIPS and Science Act, aims to expand U.S. chip production, with Intel's grant being the largest yet under this act.  

The U.S. government has yet to confirm the amount of money that Intel will receive, but rumor has it that Intel's award package may exceed $10 billion. The funding includes grants and loans aimed to bolster Intel's competitive positions as well as U.S. semiconductor manufacturing. 

Intel's U.S. expansion plans are vast. The company has already opened its $3.5 billion advanced packaging facility in New Mexico, which will be crucially important for the company's next-generation products. In addition, the company is expanding its semiconductor manufacturing capacity in Arizona with two fab modules, which are set to cost $20 billion. Intel is also establishing its brand-new Silicon Heartland site in Licking County near Columbus, Ohio, which will require a total investment of $100 billion and an upfront investment (in the first fab modules) of approximately $20 billion. This project, expected to be completed by late 2026, further demonstrates the company's commitment to expanding semiconductor manufacturing in America. 

Intel has reportedly invited customers and suppliers to the Arizona event, which indicates the significance of this award for Intel and the U.S. administration. For Biden, Arizona is an important state in the upcoming presidential election. Meanwhile, Arizona is poised to become a major hub of manufacturing as both Intel and TSMC are building new fabs in the state and their supply partners are following.

The 2022 CHIPS and Science Act, with a total funding of $52.7 billion, includes $39 billion for semiconductor production and $11 billion for research and development. GlobalFoundries and Microchip Technology have already received significant awards under the act. GlobalFoundries was granted $1.5 billion to build a new facility in New York and expand operations in Vermont. Microchip Technology received $162 million to increase production at its U.S. factories.  

The overarching goal of the U.S. government funding initiatives is to decrease dependence on China and Taiwan, as the U.S. share of global semiconductor capacity has dwindled from 37% in 1990 to just 12% in 2020, Reuters notes.

Following recent news pointing toward Intel receiving billions of government funding and special "secure enclave" treatment under the CHIPS Act aimed at all US semiconductor businesses, the Pentagon has withdrawn the planned $2.5 billion and expects the Commerce Department to pick up the tab, reports Bloomberg.

Specifically, Intel was to receive $1 billion of $3.5 billion from the Department of Commerce, with the rest coming from the Pentagon. The $2.5 billion shortfall could possibly be made up with other CHIPS Act funds at the direction of the Commerce Department. This isn't just a loss for Intel, it could also impact others. It all depends on how this total is split across the rest of CHIPS Act recipients.

Additional analysis from The American Prospect further highlights just how poor the optics and management of Intel's proposed $3.5 billion "secure enclave" facility are. A senior adviser and research professor at Georgetown University told the Prospect: "My first reaction is to emphasize that this is nearly 10 percent of the entire CHIPS Act fund. And by doing this, that will necessarily foreclose other opportunities."

Considering the main purpose of the CHIPS Act is to revitalize American fabrication and manufacturing operations, diverting so much of that money to the incumbent market leader could be seen as a poor approach. What's worse, reports indicate Intel is still demanding more than the $10+ billion it is already set to receive through the CHIPS Act. The overall demands from all companies covered by the CHIPS Act has risen to more than $70 billion in requested combined subsidies and aid, roughly twice the amount of funding that is actually available.

As the Chip War continues to develop, the United States government will need to be careful about how domestic chip and semiconductor production is handled. So far, it seems like Intel's "secure enclave" facility may be one of the first major cuts to the U.S's steps forward, though getting rid of it would seem to benefit all other recipients of the CHIPS Act. 

China and Japan have aggressively increased subsidies in the past year for chipmakers in general and TSMC in particular. The company's 2023 annual report indicates that the grants it received from Chinese and Japanese governments increased 6.74 times year-over-year. In total, TSMC got around $1.51 billion in government grants from China and Japan, which it used to build and equip its fabs, notes TrendForce. 

"Subsidiaries such as JASM and TSMC Nanjing received subsidies from the governments of Japan and China, respectively, for local plants setup and operation, which were mainly used to subsidize the purchase costs of property, plant and equipment as well as partial costs and expenses incurred from plant construction and production," TSMC's annual report reads. "For the years ended December 31, 2023 and 2022, TSMC received a total of $NT$47,546 billion ($1.51 billion) and NT$7,051 billion ($224.1 million) as government grants respectively."

Japan played a crucial role in this increase, with the Japanese government providing substantial subsidies to TSMC's subsidiary Japan Advanced Semiconductor Manufacturing (JASM) for its new Kumamoto plant in Japan in a bid to rejuvenate Japan's semiconductor industry. TSMC's Kumamoto Fab has received full backing from both the Japanese central and local governments. This support has enabled construction of the fab to progress smoothly, with mass production expected to commence in the coming months. 

Meanwhile, Japan is further increasing its support for TSMC by reportedly offering an additional ¥732 billion ($4.86 billion) in grants to build its second fab there.

Not much is known about how the Chinese government supported the expansion of TSMC's 28nm-capable fab in Nanjing, but the world's largest contract maker of chips did say that it had received support from the People's Republic. 

By contrast, TSMC's operations in Arizona have encountered setbacks. The construction of TSMC's first new U.S. fab in years started in early 2021, with a grand tool-in ceremony held in December 2022, and production start scheduled for 2024. However, the timeline for the Fab 21 phase 1 has been pushed back to 2025 due to an alleged workforce shortage in the state. What's worse is that the company delayed equipment installation for  Fab 21 phase 2 due to a lack of U.S. subsidies and uncertainties with demand. As a result, the Fab 21 phase 2, which is believed to be capable of making chips on 3nm-class technologies, will now come online in 2027 or 2028, significantly later than originally expected.

The U.S. government is set to invest $3.5 billion in Intel to boost the production of advanced chips for military and intelligence purposes, reports Bloomberg. The payment could be a part of a rumored total incentive package exceeding $10 billion from the U.S. CHIPS and Science Act (encompassing both grants and loans) or could be a part of the proposed Secure Enclave project that is designed for military and intelligence chips and is funded separately. 

The investment involves funding the Secure Enclave program for three years and is poised to make Intel a leading semiconductor player in the defense market. This program is designed to enhance the security and reliability of the supply chain for semiconductors used in military and intelligence applications. The funding is reportedly drawn from the broader CHIPS and Science Act grant pool, though it is unclear whether this is part of Intel's rumored $10 billion grants and loans. 

Intel Foundry head Stu Pann recently confirmed in an interview with Tom's Hardware that the company had signed a major — $1 billion worth — foundry contract with the U.S. Government and Department of Defense. Under the U.S. government's RAMP-C initiative, many industry players, including IBM, Microsoft, and Nvidia, are developing chips for the U.S. military. For Intel, this is a major advantage when it comes to learning how its upcoming nodes perform. However, it should be noted that not all chips for military and intelligence applications need leading-edge fabrication technologies. 

"The government funding allows them to operate with much lower-sophistication PDKs than somebody would normally run test chips with," Pann said. "So that has been really instrumental in helping us learn how our customers view our process/performance, the classic PPAC (power, performance, area, and cost): those test chips tell you what the PPAC looks like." 

This funding announcement comes as the Commerce Department prepares to unveil multi-billion-dollar awards to leading chipmakers, including Intel, Micron, and Samsung. The goal is to bolster domestic semiconductor manufacturing capabilities. The agency has already announced three grants, including a national-security-focused award to BAE Systems's American subsidiary and a $1.5 billion grant to GlobalFoundries for producing older-generation chips, including chips for military and intelligence applications.

The U.S. Department of Commerce is now accepting applications for multiple awards worth as much as $300 million in total in R&D funding for packaging technology. This marks the third funding opportunity from the CHIPS Act and the first from the R&D part of the CHIPS Act, which according to a press release, has an allocation of $11 billion. According to current plans, the awards totaling up to $300 million are expected to be given out in July.

The CHIPS Act has a total budget of $52 billion, most of which is going towards subsidies for companies such as Intel, but $11 billion of those funds are earmarked for R&D. Per a funding opportunity notice from the Commerce Department, up to $300 million of R&D funds will be awarded and spread across multiple awards depending on each applicant's budget requirements. 

The funds are specifically for researching new substrate technologies and materials, which are necessary "to support the breadth of new semiconductor applications" per a press release from the Commerce Department. Commerce Secretary Gina Raimundo remarked that "within a decade, research and activities funded by this advanced packaging program, coupled with CHIPS manufacturing incentives, will establish a vibrant, self-sustaining, and resilient onshore packaging industry, helping ensure our country is a leader in advanced semiconductor manufacturing.”

The funding opportunity focuses on R&D for substrates made of out organic, glass, or semiconductor-based materials and outlined 11 different technical targets that applicants are expected to consider in their applications. Given the focus on chiplets and advanced materials, we should probably expect solutions that are similar to, or even improve upon the latest innovations, such as Intel's upcoming glass substrates. 

The U.S. government is taking applications from many types of domestic organizations, from regular companies to non-profits to state-sponsored groups to academic institutions. However, since the application form explicitly says co-funding is preferred, it's likely at least one of the awards will be given to an organization that can rely on its own money in addition to a multi-million dollar award. That doesn't necessarily mean a giant like Intel will get an award though, especially since we can't know whether it will apply.

Concept papers, which presumably detail preliminary research proposals, are due on April 12. Full applications are due on July 3, though the Commerce Department may change that date with a 60 day notice.

Alongside the funding opportunity notice was a statement saying the Commerce Department intends to announce further funding opportunities for packaging R&D and for the Advanced Packaging Piloting Facility (APPF), which aims to bring the fruits of research to actual volume production. Additionally, we also expect a funding opportunity for a Manufacturing USA Institute by the end of June, which also uses CHIPS Act R&D funds like these packaging and substrate programs.

So far, the government has received over 600 statements of interest for funding under the U.S. CHIPS and Science Act from big and small companies, and right now, it is in the process of distributing funding in a bid to revitalize the American semiconductor industry. Gina Raimondo, the U.S. Commerce Secretary, admitted that some companies are more likely to receive funding than others as one of the goals of the CHIPS and Science Act is to onshore 20% of leading-edge chips production by 2030.

"We think our investments in leading-edge logic chip manufacturing will put this country on track to produce roughly 20% of the world's leading-edge logic chips by the end of the decade," said Raimondo at a news conference dedicated to the CHIPS Act Implementation. "That is a big deal. Why is that a big deal? Because folks, today, we are at zero. […] So, a year ago, before we saw the applications, I did not know exactly what we could do. […] Today, I am confidently standing before you to say by the end of the decade, we are going to go from zero to 20% of leading-edge [chips] built in the United States of America."

TSMC mass produces chips on N3B and N3E 3nm-class process technologies in Taiwan, and these can be considered the world's most advanced production node. Meanwhile, Intel is about to kick off mass production of chips on its Intel 20A fabrication process, a 2nm-class fabrication process that could offer better characteristics than TSMC's N3B. Intel is then expected to start making chips on its Intel 18A process technology in 2025, and the company says that node will clearly outperform TSMC's competitor. 

This will certainly increase the U.S.'s share of chips made using a leading-edge process technology. Still, because TSMC has more customers than Intel Foundry, Taiwan will remain the main producer of some of the world's most advanced chips for quite some time. Meanwhile, as Intel Foundry gains customers, it will inevitably become a considerably bigger player in the market of leading-edge logic, especially considering that it will have at least three major manufacturing sites in the U.S. (in Oregon, Arizona, and Ohio). 

Interestingly, Raimondo seems quite optimistic about building advanced semiconductor production sites in the U.S.

"Last year, I said the goal, when we are all said and done with this CHIPS initiative, is to have at least two new large-scale clusters of leading-edge logic fabs," said the Commerce Secretary. "Each of those clusters employs thousands of workers. I am pleased to tell you that today, we expect to exceed that target."

But while producing advanced chips in America is important, what is perhaps more important is that U.S.-based companies will develop processors in the country.

"By the end of this decade, by 2030, the United States of America will be the only country in the world where new chip architectures can be invented in our new research labs, including those funded by the NSTC," said Raimondo. "There will [chips] be designed in the United States for every end-use application you can think of and manufactured at scale in the United States by well-paid American workers and packaged with the most advanced technology in the world."

In addition to investing in the chip manufacturing sector, the U.S. government also plans to invest in various engineering schools across the country to ensure that there are enough specialists to work at those new fabs and build new fabs.

"Engineering schools all over the country will be pumping out more engineers and technicians trained specifically for the chips industry," said the Commerce Secretary. "We are going to make building hardware sexy again."

The U.S. Department of Commerce has set a conference call regarding implementing the U.S. CHIPS and Science Act. The call is entitled 'Investing in Leading-Edge Technology,' which is self-explanatory, so expect it to focus on pouring money into the semiconductor industry and the production of advanced chips.

The commitment of the U.S. government to rejuvenate the semiconductor industry is evident from the 2022 CHIPS and Science Act, which provided $39 billion in direct grants and another $75 billion in loans and loan guarantees to attract leading semiconductor companies to set up manufacturing operations in the U.S. The U.S. Commerce Department is in the process of allocating these funds to various applicants. It has already announced three awards to major industry players, including the American subsidiary of BAE Systems, GlobalFoundries, and Microchip Technology, which serve American companies that the government considers crucial for U.S. national security.

Meanwhile, none of the allocations have been invested in leading-edge fabs, such as those set to be built by Intel (which are set to produce chips on Intel 20A and Intel 18A process technologies in Arizona and Ohio, which belong to 2nm and 1.8nm nodes) as well as advanced fabs, such as those already built (at least on the shells level) by TSMC and Samsung in Arizona and Texas.

Meanwhile, based on a Bloomberg report citing sources familiar with the situation, the U.S. government is in talks to provide Intel with over $10 billion in subsidies under the CHIPS and Science Act. If confirmed, this would be the most prominent award package announced so far under the act, which aims to boost domestic semiconductor production. $10 billion is a lot of money to organize a news conference.

The expected financial support for Intel is likely to include loans and direct grants, with the distribution specifics still being negotiated, the report says. Neither Intel nor the U.S. Commerce Department has officially confirmed the $10 billion package. Intel has been in the running to receive substantial subsidies from the U.S. government for some time, so the company is more than likely to get quite some money.

U.S. Commerce Secretary Gina Raimondo emphasized the necessity for ongoing investments in the American semiconductor industry to regain global leadership and fulfill demand for artificial intelligence (AI) processors. She highlighted the significance of the U.S. government's effort to fund the chip industry amid global challenges during a virtual appearance at yesterday's Intel Foundry event, reports Bloomberg. 

"I suspect there will have to be — whether you call it CHIPS 2 or something else — continued investment if we want to lead the world," said Raimondo. 

Raimondo's remarks underscored the importance of the semiconductor sector, particularly in light of the increasing computational demands of AI technologies. She cited her discussions with Sam Altman, CEO of OpenAI, who is seeking U.S. government support for his chip venture. According to Raimondo, the sheer volume of chips required for AI applications, as projected by industry leaders, is astonishing. Meanwhile, a surplus of AI processors will enable more companies to adopt artificial intelligence, which will be a competitive advantage for the U.S. 

The U.S. government's commitment to revitalizing the semiconductor industry is evident in the 2022 CHIPS and Science Act, which allocated $39 billion in direct grants and an additional $75 billion in loans and loan guarantees. The Commerce Department is actively distributing these funds among numerous applicants, with three awards already announced to key players in the industry, including the American subsidiary of BAE Systems, GlobalFoundries, and Microchip Technology. 

Meanwhile, Intel is reportedly negotiating for over $10 billion in grants and loans to support its expansion plans, including a20 billion on initial two fabs in Ohio and a $20 billion expansion in Arizona. Pat Gelsinger, chief executive of Intel, expects an announcement about the award soon, but Raimondo remains tightlipped about the plan. 

While the U.S. Department of Commerce is yet to distribute the CHIPS Act money that it has, the very assurance of the U.S. government to revitalize the domestic semiconductor industry has attracted massive investments in the sector. Various semiconductor companies have either invested or committed to invest over $230 billion into the U.S. chip industry. These companies include Intel, GlobalFoundries, Micron, Samsung, Texas Instruments, and TSMC.

Intel’s previous struggles to develop new process node technologies resulted in the company eventually ceding its semiconductor manufacturing advantage to its rival TSMC. In the years since, Intel has worked to reverse that deficit with CEO Pat Gelsinger’s audacious turnaround plan, which hinges on delivering five new process nodes in four years. Critically, the plan also hinges on pivoting the company to a new IDM 2.0 philosophy that includes creating a third-party foundry, Intel Foundry Services (IFS), that produces chips for external companies while also allowing the company to retain the inherent advantages of being an IDM.

Intel’s revitalization requires hundreds of billions of dollars in investments that span the globe as it builds out additional chipmaking and packaging capacity to fuel IFS, an organization helmed by Stu Pann, the SVP and GM of Intel Foundry Services, who is tasked with making IFS the world’s second-largest foundry by 2030. 

Tom's Hardware had a chance to speak with Pann in the lead-up to the company’s inaugural IFS Direct Connect 2024 event this week (update: see the roadmap from IFS here now and news about Microsoft's 18A chip), with our interview covering important topics such as Intel’s new tactic of making Arm chips for external customers, the impact of the CHIPs Act, potential development of custom nodes, collaboration plans with UMC and Tower, and the threat of China to the mature node market.

IFS Direct Connect 2024, which kicks off tomorrow, features not only the best and brightest of Intel, like CEO Pat Gelsinger and EVP and GM of Technology Development Dr. Ann Kelleher, but also other industry luminaries, including Microsoft CEO Satya Nadella, OpenAI CEO Sam Altman, Arm CEO Rene Haas, and U.S. Secretary of Commerce Gina Raimondo.

Intel also has a full complement of representatives from its partners and customers, like UMC President Jason Wang, MediaTek President Eric Fisher, and Broadcom’s VP of Central Engineering Yuan Xing Lee, along with representatives from the incredibly important EDA suppliers, such as Synopsys, Cadence, Siemens and Ansys, that will be instrumental in Intel’s efforts to enable a robust set of industry-standard design tools that allow its IFS customers to easily design chips around its new process nodes.

IFS Direct Connect will generate plenty of news around new developments, but today, we have an interesting question and answer session with Stu Pann to discuss several of the latest IFS developments. Pann also spoke about some of the company’s not-yet-disclosed future plans -- but we’ll have to add those additional comments after the embargo lifts tomorrow. 

Paul Alcorn: I know it’s been announced that IFS is open to making Arm chips for quite some time now, but seeing the recent news hit the wire that Intel is now building an Arm chip with Faraday -- it's kind of like a splash of cold water on the face; it’s still surprising to me: You're now doing Arm Neoverse chips on Intel process nodes. Can you tell me how important that is, and about the message that it delivers to the industry?

Stu Pann: I think it's hugely important. If you look at where Arm is at today with the current Neoverse lineup, they're powering all the hyperscalers and TSMC runs those wafers. If we're going to play in that market, we have to have a strong relationship with Arm, and the Faraday announcement that we did with their server infrastructure team is proof that we want to do this kind of business. 

Just the fact that [Arm CEO] Rene Haas and I are going to be on stage talking about the Arm partnership at an Intel conference with 1,100 people in attendance - that’s proof positive that we're serious about doing this business. You can't really go back on this kind of stuff. We're committed, and we're going to move forward. We recognize that Arm has won a lot of sockets, and we want to work with them closely to make sure that whatever they do with Neoverse is optimized for 18A. And expect Rene to say more on that next week [at the event]. 

Paul Alcorn: TSMC creates a custom N4 process node for Nvidia for its GPUs. Is IFS open to doing that level of collaborative work with a third party?

Stu Pann: Absolutely. […] You can't do it just by yourself; you have to do it with an EDA partner. So, our investment with Synopsys and our investment with Cadence absolutely allows for that kind of customization, should a customer want it, but they have to commit to it. It'll be a mutual commitment to go forward. Absolutely, we're open to that. 

We’re already learning so much for our existing customers, like things about process corners, that we didn't realize. And so just the entire foundry engagement is helping Intel, I think, just to be a better company in general, because everybody does things a little differently. You take what you get, and you learn a lot from it, and then you start integrating it into your thinking around process flows and foundational IP. So we're already seeing ways we hadn't thought of to do things better as now becoming pretty clear as people press us for different things.

Paul Alcorn: Intel has recently said that 75% of the fifty IFS customer test chips are currently on 18A. Did you expect such a skew toward the leading edge? You do offer other nodes that aren't necessarily leading edge, but they aren’t mature nodes, either. It seems like the uptake is really on the leading edge of what you're offering. Did you expect more in those other nodes, or do you expect more pickup in those?

Stu Pann: No, this is what we wanted. If you look at 18A as a process technology, it is full-on EUV, and it has backside metal. It was designed from the ground up to be a foundry node with the most complete set of IP around it for processes and tools, flows, and methods. Part of the reason you see both Cadence and Synopsys on stage with us [at the event] is that everyone has a different way of doing things. To be complete, we have to have relationships with all four of the folks that are on stage with us [EDA partners]. 

People mix and match -- I don't want our customers to have to choose to do something differently with a different flow. I’d rather make it easy and friction-free for them to say, “Ok, I can use this place and route from Cadence, and this IP from Synopsys,” or whatever configuration they want. We want to make sure it's available, and we're able to do that fully on 18A. 

Paul Alcorn: IFS has the goal of being the number two foundry by the end of the decade. That's a big goal. Just in terms of sheer scale, do you think that will hinge a lot on this build-out of more mature node capacity with UMC and the collaboration with Tower?

Stu Pann: No, but it does clearly contribute to it. There are some huge wafer BOMs [large volume orders] associated with UMC and the Tower deal. We want to have these mature nodes, and we learn a lot from being engaged with UMC and Tower - and how to do low-cost things. We learn a lot from UMC in terms of doing line extensions, because they do line extensions to all of their products today.

That's a really powerful partnership for us, but our real thrust has to be around 18A. The market price for a 12nm wafer is very different than the market price of an 18A or an N3P wafer. So, if you’re going to get to that kind of goal, you have to be able to build the most high-performance process on the planet, which can then command the best price on the planet. 

Now, clearly, we have to compete with TSMC, and we're going to have to be aggressive on pricing. But it's still a better place to be, and it's got all the attributes we need to be competitive on our own. We have our own process technology, our own packaging technology, and we know how to make the tools work. And we have the ability to compete for that business by applying our systems expertise and helping our customers out, which is something that's unique to us. 

We just have a much higher degree of winning significant customer orders on 18A, which is why we're focused there. [...] I’ll give you an example: You probably know the dates for Samsung's backside power with their 2nm process, and you know TSMCs dates for backside power with 2nm. You'll see our dates, and then you compare and say, okay, where’s Intel at versus where the other guys are. Then you can look at our footprint and our track record and then decide who's likely to be successful with these customers.

Paul Alcorn: Speaking of building capacity brings us to the CHIPs Act. It feels like the US government is taking its time with the subsidies; it's taken a lot longer than most people expected. How instrumental do you think that is as a booster for IFS?

Stu Pann: It's hugely important to us. We’ve worked closely with the CHIPS office. Pat was personally responsible, I think more so than any American executive, in making the CHIPS Act a reality. Since its inception, we've been in the middle of this. 

And yeah, the CHIPS guys who we've worked with really closely are being very diligent stewards of the country’s spending. They've got a very thorough process, they're very well-researched, and they have a lot of questions. They want to make sure that they give us the kind of money that we're asking for and that it's going to be money well spent, and that process takes time. 

This is the biggest piece of industrial policy legislation since World War Two. They’re building the plane as they're flying it right now. And we're hopeful we can conclude some level of agreement with them, but it'll conclude when it concludes. Secretary Raimondo will be the one who says, ‘Okay, I'm now ready to talk about it.’ But the fact that she is coming to the event says that she wants to talk about Intel's role for the US and its allies in terms of being a national champion for US semiconductors. That was the message she delivered on Cramer’s broadcast four or five weeks ago. We'll see what she says next week. But she is keenly interested in making sure that the most important semiconductor supplier in the United States is helped by this effort.

Paul Alcorn: This brings us to RAMP-C. Can you tell me what initiatives like that do and how important is it for the Department of Defense (DoD) and Intel to build that relationship?

Stu Pann: Yeah, during the earnings call, we announced that we had a billion-dollar reward from the US government in terms of supplying advanced semiconductors to the DoD. Where they go, and what they do, we obviously would never talk about, but they don't make a billion-dollar commitment without serious research and serious commitment. Not only on their part, but on the part of the defense industrial base. 

If you look at RAMP-C, Lockheed Martin and Northrop Grumman are a part of it, and Boeing has expressed an interest. All the defense industrial base right now is looking at RAMP-C and what it means very carefully. And in fact, we actually have a government session the day after Foundry Day, just for those customers because they have a very specific set of requirements. So that's been a big deal for us, just for establishing us as a mainstream supplier of the US government in a lot of different applications. 

One of the DoD senior scientists said this kind of capability gives our soldiers an asymmetric advantage on the battlefield because they're now able to use leading-edge technology versus technology that’s ten years old. So, the DoD has been a huge booster because they want this capability for our soldiers and our troops protecting the US national interests.

In terms of the other things that RAMP-C bought us, the announced partners of RAMP-C are IBM, Microsoft, and Nvidia. They're all running test chips, and they’re running test chips with funding from RAMP-C. So they’re able to operate with immature PDKs, which normally they wouldn't do. 

The government funding allows them to operate with much lower-sophistication PDKs than somebody would normally run test chips with. And so that's been really instrumental in helping us learn how our customers view our process/performance, the classic PPAC (power, performance, area, and cost): those test chips tell you what the PPAC looks like. So that gives us at least a head start with those customers in terms of developing a track record, allowing them to use immature PDKs, and covering their expenses. Hopefully that leads to more design wins down the road, but we’re not ready to announce those today.

Paul Alcorn: Can you address the persistent rumors that IFS is doing packaging work with Nvidia, or for Nvidia?

Stu Pann: I can't. I am aware of the rumor. In this business, especially now, our customers are asking for confidentiality; they don't want to disclose. They will decide when and where they want to disclose and what they'll disclose. I’m not speaking with Nvidia in mind, but just generically – all the customers feel that way. When they're ready to talk, they will talk, and they will let us know when they're going to talk. I would love to be more visible, but I also have to respect what they want.

Paul Alcorn: I know you just had the Rio Rancho site come online for advanced packaging. However, IFS is already doing packaging work for its external customers. Where is that packaging taking place? Is that within your existing fab network, and is all of that based in the US?

Stu Pann: The plan right now is to do a lot of the really sophisticated packaging in New Mexico, Oregon, and some in Arizona. Depending on the product and what kind of packaging we're doing, it will oscillate around those. We could do a final assembly and test in Costa Rica, for example, with server [processors], because Costa Rica does the bulk of our assembly/test for our server parts. If somebody wanted a fully integrated, tested, packaged, everything kind of deal, they could do that, but they could also send us TSMC wafers, for example, and we can package them up and get them sent back to their OSAT (outsourced assembly and test) for final assembly/test.

We're willing to configure whatever our customers want us to and do whatever parts of the packaging process they want us to play in, provided we have some form of competitive advantage. We’re winning customers on EMIB, which is Intel proprietary. We’re winning customers based on a technology that really is a Foveros kind of thinking - not the way Meteor Lake is done, but it is hybrid bonding. So, we're working on the supply chains to go do all of that. But we're trying to be as customer-sensitive as we can be.

A lot of customers want at least a ‘Made in the Americas’ kind of setup. And if we do a wafer fab in the US for an 18A logic device, for example, we can package something in the Americas in its entirety without having to have it cross the Pacific Ocean. Now, having said that, we’ll do packaging in Malaysia and obviously open up packaging in Poland over time. So, it'll be resilient, but if you want to dictate a certain flow, if we can make it work in our network, we're sure going to try.

Paul Alcorn: One thing that really sticks out about how TSMC operates is their OIP program, where they have this big arsenal of tools that are available for their customers. Is IFS looking to develop a similar approach or program in that vein?

Stu Pann: I hired the guy that did that program a while ago. We're going to have a slide about that in my deck, which will describe our answer to OIP. The fact that we have 33 ecosystem vendors who have booths everywhere [at the event], it’s just like the duty-free shops in the airport -- you have to walk past all that to get to the main stage.

Paul Alcorn: We’re starting to see a lot of fab build-outs in China, primarily around mature nodes, and a lot of CAPEX is going into that. A lot of industry leaders have signaled an increasing alarm. I think Secretary Raimondo herself has said they're worried about China flooding the market with mature chips. I know in the sphere of big foundry players with extensive mature node capacity, like TSMC or maybe GlobalFoundries, that could potentially really hurt. What about for IFS? How do you think this impacts IFS and its competitive position?

Stu Pann: Yeah, this is mostly mature node stuff. Doing a deal with Tower, where we take advantage of fully depreciated factories and fully depreciated tools, and where they contribute some newer tools to that. We duplicate their process flow, and we give Tower a US-based source of capacity that they could not do on their own for cost and timing reasons. Same with UMC; We have an available building in Arizona, a lot of depreciated tools from our 14nm and 10nm process technology, and we have the people there. And the building is not EUV-capable. So, we have a set of assets, and we are able to sweat those assets more effectively by doing collaboration agreements with them – these aren’t really formal partnerships. Collaborating with them in the supply chain gives us a great cost base, and we can do line extensions in US-based capacity. 

At the end of the day, the mature factories in China are just that -- they're in China. They’re not here. So we can be decently competitive on a cost basis. Now, if they do other methods of pricing, what can we do? But once again, they're in China, not in the US. Tower and UMC do a lot of business with US multinationals, so that’s the play for us. Now, competing with China inside of China? That would be a tough one - but we're not there.