US details vision, plans for CHIPS Act funds

US details vision, plans for CHIPS Act funds

Business news |
By Nick Flaherty

The US Department of Commerce has announced its strategic vision and application process for semiconductor supply chain projects but has delayed applications from smaller companies.

Nearly 400 companies are in interested in the incentives from the CHIPS for America Act. Applications are opening for larger companies with projects over $300m, although there is a delay to late autumn in supporting smaller companies and R&D activities.

The US is also keen to point out it is working with other countries, including the EU and the UK, to avoid trade frictions.

The supply of wafers is a key area of concern in the US and Europe. The external collaboration includes Korea and Japan as key suppliers.

Large semiconductor supply chain projects include materials and manufacturing equipment facility projects with capital investments equal to or exceeding $300 million, and smaller projects are below that threshold. This will be key for the UK semiconductor strategy and the delayed Advisory board.

“After the pandemic exposed holes and bottlenecks in our semiconductor supply chains that sent shockwaves across our economy, the CHIPS and Science Act is a historic opportunity to ensure our microchip supply chain resilience,” said Secretary of Commerce Gina Raimondo. “Thanks to President Biden’s Investing in America agenda, we’re already seeing billions in private sector investment bolster the semiconductor supply chain. We’re laying out our vision for how we’ll build on that progress by responsibly making investments to ensure resiliency and success for the clusters we will create.”

Alongside the funding opportunity for larger supply chain projects, the Department also released a “Vision for Success” outlining strategic objectives for investments in the semiconductor supply chain.This vision, in addition to the statements of interest the Department received, will inform implementation and ensure CHIPS funding crowds in private capital – not replace it – across the semiconductor ecosystem.

It includes strengthening supply chain resilience, including by reducing chokepoint risks flowing from the geographic concentration of critical semiconductor inputs, which has a focus on Taiwan.

Advancing US technology leadership includes incentivizing major U.S. manufacturing equipment and materials suppliers to increase their footprints in the United States and attracting non-US suppliers of the world’s most advanced equipment, materials, and subsystems to establish large-scale footprints here, which is where some of the trade friction will occur. This has a focus on equipment, looking to support Applied Materials and Lam Research to take on ASML.

The plan also wants to support vibrant US fab clusters so that each CHIPS-funded cluster is supported by an ecosystem of reliable suppliers.

Semiconductor skills

The funding also maintains the Department’s emphasis on building the construction and facility workforce that will support resilient domestic supply chains, including through partnerships with labour, educational institutions, workforce development organizations, and others.

The first funding opportunity seeks applications for projects to construct, expand, or modernize commercial facilities for the production of leading-edge, current-generation, and mature-node semiconductors. This same funding opportunity is now open to materials and manufacturing equipment facility projects with capital investments equal to or exceeding $300 million.

Large-scale supply chain projects that are now eligible will follow the five-part application process laid out in the first funding opportunity: statement of interest, pre-application (optional but recommended), full application, due diligence, and award preparation and issuance. Applicants will be evaluated based primarily on the extent to which the application addresses the program’s economic and national security objectives, but they will also be evaluated based on commercial viability, financial strength, project technical feasibility and readiness, workforce development, and broader impacts.  

Pre-applications for larger materials and manufacturing equipment supplier facility projects accepted on a rolling basis starting September 1, 2023, and full applications will be accepted on a rolling basis starting October 23, 2023.

The process for SMEs will be simplified and open after that. The Department will subsequently release a separate funding opportunity for R&D with details on the application process and timeline.

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