U.S Unveils Plans To Catalyse Domestic Semiconductor Industry With $39 Billion Incentives To Build Chip Manufacturing Capacity, $11 Billion For Advanced R&D

U.S. Secretary of Commerce Gina Raimondo said that the CHIPS and Science Act has provided a historic opportunity to solidify the country's technology and innovation leadership while protecting its economic and national security.

She was delivering a speech titled “The CHIPS Act and a Long-term Vision for America’s Technological Leadership” at Georgetown University’s School of Foreign Service. 

The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS and Science Act), signed into law in August 2022, aims to catalyse investments in domestic semiconductor manufacturing capacity. 

The act seeks to invests $280 billion to bolster US semiconductor capacity, commerciali­zation of leading-edge technologies, such as quantum computing, AI, clean energy, and nanotechnology, and create new regional high-tech hubs and a bigger, more inclusive science, technology, engineering, and math (STEM) workforce. 

Out of the proposed $280 billion, $50 billion has been earmarked for expanding domestic manufacturing and developing cutting-edge research of mature and advanced semiconductors. While $39 billion will be towards accelerating and driving domestic chip production ($6 billion of which can cover direct loans and loan guarantees), the remaining $11 billion will be towards advanced semiconductor R&D.

Raimondo noted while $39 billion in incentives will bring semiconductor manufacturing back to the U.S., the country needs to build a robust R&D ecosystem to ensure the production capacity and capabilities stays within.

Pointing out U.S. accounted for 37% of global chip manufacturing capacity in 1990 , the share has ow shrunk now to 12%, Raimondo said.

The Commerce Secretary said that Taiwan alone produces 92% of the world’s leading-edge chips, even though the majority of them are still based on technology created at UC Berkeley—with federal funding.

"We sacrificed our manufacturing capacity and workforce in the mistaken belief that we could somehow maintain our technological leadership without them." she further said.

"That is why we will invest $11B to build a strong semiconductor R&D ecosystem to generate the ideas and the talent we need to support these efforts." she added

Raimondi said that a National Semiconductor Technology Center (NSTC) will be established to coordinate R&D in semiconductors.

The NSTC will be operationalised in a public-private partnership where government, industry, customers, suppliers, educational institutions, entrepreneurs, and investors converge to innovate, connect, and solve problems in the chip industry.

"Most importantly, the NSTC is going to ensure the U.S. leads the way in the next generation of semiconductor technologies—everything from quantum computing, materials science, and AI to the future applications we haven’t even thought of yet" she said.

The government will also encourage companies to build at least two advanced domestic chip factories employing thousands of workers, she said. The centers would also include a "robust supplier ecosystem," she added.