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U.S. Congress passage of subsidies prompts chip makers to move on projects

U.S. Congress passage of subsidies prompts chip makers to move on projects
U.S. Congress passage of subsidies prompts chip makers to move on projects Copyright Thomson Reuters 2022
Copyright Thomson Reuters 2022
By Reuters
Published on Updated
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By Jane Lanhee Lee

- Major semiconductor makers on Thursday hailed passage in the U.S. Congress of a pot of federal government money for new chip factories in the United States, and said they were moving ahead on various projects that had been stalled awaiting funding.

The “Chips and Science Act” authorizes about $52 billion in government subsidies for U.S. semiconductor production and research, and an investment tax credit for chip plants estimated to be worth $24 billion. Passed by the U.S. Senate on Wednesday and the House of Representatives on Thursday, it was headed to President Joe Biden's desk for signing.

U.S. semiconductor manufacturer SkyWater Technology Inc, which last week announced $1.8 billion investment plans for a chip research and production facility in Indiana, in partnership with the state and Purdue University, immediately committed to move forward.

“Now the chips act has passed, we will work with the State and Purdue (University) to seek the CHIPS grant funding from the U.S. Department of Commerce that is necessary for us to move forward with ground breaking,” said SkyWater CEO Thomas Sonderman.

Thomas Caulfield, CEO of GlobalFoundries Inc, who last week told Reuters expansion plans in its New York factory could be delayed without the chips bill, also immediately committed to building out more capacity.

"GF is already spending more than a billion dollars to expand manufacturing capacity at its campus and headquarters in Malta and is ready to accelerate its expansion plans there," Caulfield said in a statement, adding that the expansion would create roughly a thousand high-tech jobs.

In January, Intel Corp announced a $20 billion investment to build a new mega chip factory in Ohio but the ground breaking of that had been delayed to wait for the chips bills passage, Chief Executive Officer Pat Gelsinger told Reuters on Thursday.

"We are we were originally going to do that in the middle of July, and we said, 'hey, we're not going to do that until we have firmness of CHIPS Act'," said Gelsinger. "Now ... we will get a firm date for groundbreaking A.S.A.P."

Gelsinger also said the latest down cycle in semiconductors would not delay plans for the Ohio investment.

"These are long-term capital investments. It takes us four to five years to build one of these facilities and get it up and operational," he said.

Intel on Thursday posted second quarter earnings that missed estimates and lowered its annual revenue forecast.

Chip companies are counting on the funding for research, not just manufacturing.

Dutch NXP Semiconductors NV CEO Kurt Sievers told Reuters this week that the company would apply for grants to expand research and development in the United States, pointing out automotive and communications infrastructure as areas of interest. NXP has labs in Austin, Texas, Chandler, Arizona, and San Jose, California.

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