Council on Foreign Relations’ Post

A Year On: The CHIPS and Science Act's Slow Rollout in U.S. Semiconductor Industry 🇺🇸🔌 Hey everyone! The U.S. semiconductor industry is going through a curious phase. A year after President Joe Biden signed the CHIPS and Science Act into law, companies are still waiting to see the federal money flow. Let’s explore what’s happening and what this means for the sector and the economy at large. 🧐 The Act and Its Objectives 🎯 The CHIPS and Science Act aimed to allocate $52.7 billion to boost the domestic semiconductor industry. The goal? To enhance national security by reducing dependency on foreign semiconductor manufacturing, especially from countries deemed a security risk, like China. Where's the Money? 💵 Despite the fanfare and anticipation, the legislation hasn't yet led to any disbursed funds. U.S. Secretary of Commerce Gina Raimondo commented, "We will start to give out the money later this year. We're pushing the team to go fast, but even more important, to get it right." A Flock of Interested Companies 🏢 The Department of Commerce has received over 460 statements of interest from worldwide companies. This figure has seen a noticeable uptick from the nearly 400 that were previously reported. Waiting for the Green Light 🚦 Companies like Integra Technologies and SkyWater Technology have planned significant investments, but these are contingent on receiving federal funding. Integra aims to create nearly 2,000 direct, high-paying jobs with its proposed 1 million-square-foot facility. SkyWater has a $1.8 billion plant in the pipeline, which will employ 700 people. Big Firms Take the Lead 🌐 While waiting for federal dollars, companies like Intel, TSMC, and Wolfspeed have commenced expansions, hiring, and construction activities, albeit without any CHIPS Act money. What This All Means 🤔 1️⃣ Delayed Action: The industry has yet to see the Act's impact, causing some delays in strategic planning for companies.    2️⃣ Private Sector Optimism: Despite delays, the Act has generated a flurry of interest and increased private sector investment plans.    3️⃣ Resource Allocation Challenges: With numerous companies in the queue for limited federal funding, there are going to be winners and losers in this subsidy race.    4️⃣ National Security and Economic Implications: The delay could impact the timeline of reducing U.S. dependence on foreign semiconductor supply, a critical concern in the current geopolitical climate. 📌 Takeaway: The U.S. semiconductor industry is poised for transformation, but the pace and extent of that change depend on the efficient rollout of the CHIPS Act. Stakeholders from government to industry players need to collaborate effectively to navigate this waiting game. https://lnkd.in/guUR7V_F #CHIPSAct #Semiconductors #USIndustry #TechPolicy #NationalSecurity

The COVID-19 pandemic laid bare the vulnerabilities of the global semiconductor supply chain. It sparked a domestic reshoring effort that has led to dozens of new microchip development projects in the United States. These projects are creating jobs and investment on a large scale. Find out which states are taking the lead in this reshoring initiative: https://ow.ly/h2qo50Q3C2h

"A German budget crisis threatened the federal funding of Intel's, TSMC's, and Wolfspeed's fabs as well as multiple other high-tech projects in the country. But as the year comes to an end, the coalition agreed to fund building up these important facilities and this week the government formally announced that investments have been secured." #germany #europe #foundries #intel #tsmc #chips #semiconductors #semiconductorindustry #innovation #technology #technologynews

UK's semiconductor strategy, with a budget of single-digit billions, will finally be announced in March 2023 by PM Rishi Sunak. The EU and US have already rolled out multibillion-dollar subsidy programs. Some have threatened to move their businesses out of the country if support isn't provided. A recent government reorganisation may have shifted responsibility to the new Department for Science, Innovation and Technology. #semiconductor #technology #innovation #strategy

A little over a year ago, Congress passed the CHIPS and Science Act to catalyze investments in the U.S. semiconductor industry. The law set aside billions for the construction of new and expanded manufacturing facilities and to support research into new chip technologies. But the investment is not enough and now, states are stepping in. What does this mean for the CHIPS act and how does the U.S. compete globally with those that are funded by other governments, like China? Find out here on Route Fifty: https://hubs.li/Q021JtRw0 #CHIPSandScienceAct #semiconductor #manufacturing #chiptechnology #global competition

U.S. President Biden announced on Wednesday an agreement to provide Intel with $8.5 billion in direct funding and $11 billion in loans under the CHIPS and Science Act. Intel will use the funding for wafer fabs in Arizona, Ohio, New Mexico, and Oregon. As reported in our December 2023 newsletter, the CHIPS Act provides a total of $52.7 billion for the U.S. semiconductor industry, including $39 billion in manufacturing incentives. Prior to the Intel grant, the CHIPS Act had announced grants totaling $1.7 billion to GlobalFoundries, Microchip Technology, and BAE Systems, according to the Semiconductor Industry Association (SIA). Other nations have also allocated funds to promote semiconductor production. The European Union in September 2023 passed the European Chips Act which provides for 43 billion euro (US$47 billion) of public and private investment in the semiconductor industry. In November 2023, Japan allocated 2 trillion yen (US$13 billion) for semiconductor manufacturing. Taiwan in January 2024 enacted a law to provide tax breaks for semiconductor companies. South Korea in March 2023 passed a bill to provide tax breaks to strategic technologies including semiconductors. China is expected to create a $40 billion fund backed by the government to subsidize its semiconductor industry. What is the outlook for capital expenditures (CapEx) in the semiconductor industry this year? The CHIPS Act was designed to spur CapEx, but much of the effect will not occur until after 2024. After a disappointing 8.2% decline in the semiconductor market last year, many companies are cautious about CapEx in 2024. We at Semiconductor Intelligence estimate total semiconductor CapEx in 2023 was $169 billion, down 7% from 2022. Our forecast is a 2% decline in CapEx in 2024. See more at my website www.sc-iq.com

Europe’s Technological Renaissance: The EU Chips Act Propels Semiconductor Industry to New Heights In a significant move aimed at bolstering its technological prowess, the European Union has given the green light to “The EU Chips Act,” an ambitious initiative that will see a staggering €43 billion invested in constructing semiconductor fabs across Europe. With...

Industrial is on the docket today. U.S. subsidies in the computer chip and electric vehicle sectors are creating an industrial supercycle and finally producing critical superconductor chips here. 

The EU has “massively adopted” the Chips Act, legislation aimed at boosting the EU’s #semiconductor industry amid growing tension with China. The Chips Act is designed to increase semiconductor investment in the #EU in an effort to help the bloc become more independent for its semiconductor needs. #investment #help https://lnkd.in/e8tp3Eb3