The U.S. Department of Commerce detailed Tuesday how it plans to roll out around $50 billion in funding for domestic semiconductor chip manufacturing.
Appropriated through the CHIPs and Science Act signed last month, the funding aims to accelerate microchip manufacturing in the wake of a global shortage that rocked the automotive industry and revealed shaky supply chains.
"With this funding, we're going to make sure that the United states is never again in a position where our national security interests are compromised or key industries are immobilized due to our inability to produce essential semiconductors here at home," Commerce Secretary Gina Raimondo said Tuesday.
Around $28 billion of the funding will go to large-scale investments in leading-edge chips, she said, the kind of chips that power supercomputers, servers, laptops, phones and other electronics. Around $10 billion will go to mature and current-generation chips, the kind more frequently used in vehicles and medical devices. Michigan Senators Gary Peters, D-Michigan, and Debbie Stabenow, D-Michigan, pushed for at least $2 billion to go to such chips.
Finally, $11 billion will be spent on research and development initiatives, including the creation of a National Semiconductor Technology Center. The public-private organization will focus on advancing semiconductor design, scaling manufacturing processes, and developing a workforce that can staff an expanding chips industry.
The U.S. consumes around 30% of mature chips and produces around 13%, Raimondo said. The country consumes more than 25% of the world's leading-edge chips and produces zero of them. "We need to fix that."
The agency expects to begin accepting applications for funding from companies by February 2023.
Over the last two years, the global auto industry has suffered from a semiconductor chip shortage kicked off by the pandemic. It has forced automakers to cut back shifts and hold nearly-finished vehicles as they await necessary chips. That has led auto supply to trail demand, pushing up prices and contributing to inflation.
The chips funding passed with bipartisan support, but faced some opposition from members of both political parties who argued it represented a handout to already-profitable companies interested in locating in the U.S.
House Speaker Nancy Pelosi, D-California, and the Biden administration argued there are sufficient guardrails to ensure the taxpayer money is well-spent. Raimondo reiterated that during Tuesday's press briefing.
The money isn't intended to replace private capital and can't be used for stock buybacks, she said. The agency has the authority to "claw back" money if the company fails to start or finish the project on time, "and make no mistake about it, we will use that clawback authority" if necessary, she said.
Companies benefitting from the funding will also be barred from making business investments in China and won't be allowed to send the newest technology overseas, she said.
The agency plans to hire experts with experience in corporate negotiations and the semiconductor industry to negotiate agreements with companies, she added, which will include requiring them to provide financial disclosures and capital investment plans that demonstrate the money is "absolutely necessary to make these investments."
