White House details how CHIPS money will be spent

Dive Brief:

  • The U.S. Department of Commerce released its road map for how it will spend the lion’s share of the $52 billion CHIPS Act, outlining its strategy to spur long-term growth in the domestic semiconductor industry by deploying $50 billion via the CHIPS for America fund
  • The objectives go beyond supporting construction of a few massive semiconductor projects to also focus on the development of regional clusters of manufacturing facilities, suppliers and workforce programs. 
  • About $28 billion of the funding will target domestic production of leading edge logic and memory chips that require the most sophisticated manufacturing processes available today, according to the report.

Dive Insight:

The CHIPS for America fund will strengthen the domestic semiconductor industry and promote innovation while creating good-paying jobs in American communities, according to the report.

Beyond the $28 billion for sophisticated manufacturing, another $11 billion will target research and development initiatives, namely a National Semiconductor Technology Center, a National Advanced Packing Manufacturing Program, up to three new Manufacturing USA Institutes and a National Institute of Standards and Technology metrology R&D programs. 

About $10 billion will be allocated for new manufacturing capacity for mature and current-generation chips, new and specialty technologies and for semiconductor industry suppliers, according to the report. 

The remaining $1 billion in program funds will be for salaries, expenses, administration and oversight purposes to carry out the CHIPS for America Fund.

The Department of Commerce has identified four strategic goals for the fund:

  • Invest in U.S. production of strategically important semiconductor chips, particularly those using leading-edge technologies.
  • Assure a sufficient, sustainable and secure supply of older and current generation chips for national security purposes and for critical manufacturing industries.
  • Strengthen U.S. semiconductor research and development leadership to capture the next set of critical technologies, applications and industries.
  • Grow a diverse semiconductor workforce and build strong communities that participate in the prosperity of the semiconductor industry.

Commerce plans to detail within six months the eligibility, evaluation and selection criteria for proposals for the incentive funds, according to the strategy summary. In the meantime, it’s encouraging potential applicants to consider ways to:

  • Increase scale and attract private capital.
  • Leverage collaborations to build out semiconductor ecosystems
  • Establish a secure and resilient semiconductor supply chain.
  • Create inclusive and broadly shared opportunities for businesses.
  • Provide robust financial plans.

Industry reactions

Erin Roberts, a construction accountant for Ernst & Young, recently told Construction Dive that the contribution of private capital to these projects could increase the size of CHIPS Act funding tenfold. 

Federal Davis-Bacon requirements will apply to CHIPS-funded construction projects, which means workers will be paid local prevailing wages, a point that some industry groups have pushed back against. 

For example, those requirements “limit the ability of many otherwise qualified small businesses and skilled construction workers and apprentices from participating in these projects,” said Peter Comstock, senior director of legislative affairs at Associated Builders and Contractors.

Nevertheless, Richard Branch, chief economist for Dodge Data & Analytics, said the CHIPS Act will “keep the construction sector on sure footing as the economy slows over the next year.” 

James Christianson, vice president of government relations at the Associated General Contractors of America, said the act will “spur broader economic development and new, long-term construction jobs,” in a letter praising the passage of the CHIPS Act.

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