US opens applications for chip cash

US opens applications for chip cash

Business news |
By Nick Flaherty

The US government has opened the first phase of its incentive programme to boost local semiconductor production with an interesting set of priorities.

The CHIPS for America Act has raised concerns in Europe about the level of subsidies creating an unbalanced market or even unfair competition. The application process also acknowledges that the industry is in a downturn and that the funding is not a subsidy for poor market conditions.

In looking for two leading edge fabs and a memory fab, the US Department of Commerce is also prioritising engaging with U.S. partners and allies, particularly for compound semiconductors such as Gallium Nitride used in radar and satellite systems, as well as more mature process technologies.

It also wants to make sure that leading edge process technology happens in the US, which may be an issue for funding for US fabs being built by TSMC, Samsung and even Dutch chip maker NXP which has a fab in Texas. Fellow Dutch equipment maker ASML is also facing pressure from the US over the supply of EUV equipment to Chinese customers using technology from its US subsidiary. 

Another sticking point could well be ‘enforcing guardrails’. This is a reference to making sure that there is no national security risk involved in the deals, which could well be an issue for companies such as Nexperia following the national security concerns expressed in the UK.

The first funding opportunity for its incentives programme, run by the National Institute for Standards and technology (NIST) seeks applications for projects for the construction, expansion, or modernization of commercial facilities for the front- and back-end fabrication of leading-edge, current-generation, and mature-node semiconductors.

 Two additional funding opportunities—for materials and manufacturing equipment facilities, and for research and development facilities—will be announced later this year.

For potential applications for leading-edge facilities, pre-applications (optional) and full applications will be accepted on a rolling basis beginning March 31, 2023.

For potential applications for current-generation, mature-node, and back-end production facilities, pre-applications (recommended) will be accepted on a rolling basis beginning May 1, 2023, and full applications will be accepted on a rolling basis beginning June 26, 2023.

The aim is to have at least two new large-scale US clusters of leading-edge logic fabs by 2030, where clusters are geographically compact areas with multiple commercial-scale fabs owned and operated by one or more companies; a large, diverse, and skilled workforce; nearby suppliers; R&D facilities; utilities; and specialized infrastructure.

Each cluster will have the scale, infrastructure, and other competitive advantages required to ensure that chipmakers view continued expansion in the United States as economically attractive and core to their business models, even in the absence of future funding from the CHIPS Program Office. 

It also wants to see US-based workers develop and scale the process technologies underlying future generations of logic chips, which will be a key issue with TSMC getting funds for its fabs in Arizona.

Each CHIPS-funded fab will be supported by an ecosystem of reliable suppliers committed to operating and innovating in the United States and the U.S. Department of Defense and national security community will have access to secure leading-edge logic chip manufacturing in a commercial production environment in the United States.

The funding also aims to support multiple high-volume advanced packaging facilities for both logic and memory chips, and semiconductors produced by CHIPS-funded fabs will have multiple options for packaging services, including from both U.S-based facilities and other facilities in diverse locations outside of countries of concern.

The funding will also support expansion of mature-node chips most vital to US economic and national security, compound semiconductors and other specialty chips, which will be an opportunity for Microchip, Wolfspeed and onsemi in silicon carbide.

This is not just locally, as the US will also coordinate with its allies and partners to ensure resilient production of and access to current-generation and mature-node chips, and chipmakers will be able to respond more nimbly to supply and demand shocks.

NIST warns that trade-offs will be necessary. Not every applicant will receive funding, and many projects will not receive as much support as applicants request.

“Moreover, although the CHIPS Program Office is launching its first funding opportunity amid a cyclical downturn in the industry, CHIPS funding will not be used as a crutch to help companies endure temporary slumps. Instead, the CHIPS Program Office will be laser-focused on advancing U.S. economic and national security objectives,” it said.

“The CHIPS Program Office is clear-eyed about the scale of the challenge it faces. It will not be easy to rebuild a highly complex manufacturing industry that has been declining for decades in the United States. Success will require long-term ambition: building a domestic semiconductor ecosystem, revitalizing American manufacturing, and training the next generation of scientists, engineers, and technicians.”



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