$38B in CHIPS Act grants aim to build US microchip boom

By Larry StewartSeptember 16, 2022

Intel’s initial investment of more than $20 billion will build two leading-edge chip fabs in Licking County, Ohio. Image: Intel

The U.S. Department of Commerce released its strategy to spend the $50 billion Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Fund created by the CHIPS Act of 2022 to boost long-term growth in domestic semiconductor manufacturing. The fund includes $28 billion in grants, loan guarantees and other incentives to draw private investment into building microchip plants in the U.S. that Commerce expects will yield investments of ‘many multiples’ of those incentives.

They’ll need it. Building semiconductor-manufacturing campuses and the support clusters they require is expensive. For example, Texas Instruments broke ground in May on a new 300-mm semiconductor wafer fabrication plant in Sherman, Texas. The potential $30 billion investment includes plans for four plants, or ‘fabs’ in semiconductor lingo, supporting as many as 3,000 direct jobs.

Intel broke ground last week for construction of two leading-edge chip fabs in Licking County, Ohio, with an initial investment of more than $20 billion. As the largest single private-sector investment in Ohio history, the initial phase of the project is expected to create 3,000 Intel jobs and 7,000 construction jobs over the course of the build, and to support tens of thousands more local, long-term jobs across a broad ecosystem of suppliers and partners. The fab is scheduled to come online in 2025. At full buildout on the 1,000-acre site, the total investment could grow to $100 billion over the next decade.

The CHIPS for America Fund’s four primary goals are:

  1. Establish and expand domestic production of leading-edge semiconductors, which the U.S. currently makes 0% of the world’s supply
  2. Build a sufficient and stable supply of mature node semiconductors
  3. Invest in R&D to ensure the next generation semiconductor technology is developed and produced in the U.S.
  4. Create tens of thousands of good-paying manufacturing jobs and more than a hundred thousand construction jobs. This effort will ensure the pipeline for these jobs expands to include people who have historically not had a chance to participate in this industry, including women, people of color, veterans and people who live in rural areas.

The program’s funding is divided to support three distinct initiatives:

  1. Large scale investments in leading edge manufacturing: The CHIPS incentives program will target approximately three quarters of the incentives funding, around $28 billion, to establish domestic production of leading-edge logic and memory chips that require the most sophisticated manufacturing processes available today. Those amounts may be available for grants or cooperative agreements, or to subsidize loans or loan guarantees. The recently enacted advanced manufacturing facility investment tax credit is also expected to generate additional project investment from participants and potentially reduce the required share of CHIPS incentives. Commerce will seek proposals for construction or expansion of manufacturing facilities to fabricate, package, assemble and test these components, focusing on projects that involve multiple high-cost production lines and associated supplier infrastructure.
  2. New capacity for mature and current-generation chips, new and specialty technologies, and for semiconductor industry suppliers: Incentives will target increasing domestic production of a range of semiconductors, including chips used in defense and in critical commercial sectors such as automobiles, information and communications technology, and medical devices. Commerce expects dozens of awards with the total value expected to be at least a quarter of the available CHIPS incentives funding, or about $10 billion. Those amounts may be available for grants or cooperative agreements, or to subsidize loans or loan guarantees.
  3. Initiatives to strengthen US leadership in R&D: The CHIPS R&D program will invest $11 billion in a National Semiconductor Technology Center, a National Advanced Packaging Manufacturing Program, up to three new Manufacturing USA Institutes, and in NIST metrology research and development programs. The constellation of programs is intended to create a dynamic network of innovation for the semiconductor ecosystem in the United States. Executing this vision will require collaboration with academia, industry, and allied countries, and will require sustained investment over many years.

“Overall, CHIPS funding is only a small part of the total expected investment in the (U.S.) semiconductor industry,” according to a CHIPS for America strategy paper released by the Department of Commerce this week. “When combined with the (investment tax credit), private investment, loans, and state and local funding, total investment in the industry will be many multiples of the amounts available for CHIPS incentive funding.”

This rendering of a Texas Instruments microchip fab with four lines is expected to be a $30 billion investment in Sherman, Texas. Image: Texas Instruments

An Intel FAQ document suggests that it takes about three years, $10 billion and 6,000 construction workers to complete a 70-foot-tall, four-story semiconductor fab. Each fab is at least 250,000 square feet, and four football fields could fit inside the clean room.

On an Intel fab build in Ireland, 83 tons of reinforcing steel were fabbed and 785,000 cubic yards of concrete poured. The project required another 39 tons of structural steel.

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