CHIPS Act will funnel billions to global chip makers

CHIPS Act will funnel billions to global chip makers

The new US legislation will reward companies with a 25 percent tax credit on new chip fabs, plus $39 billion in direct subsidies.

Leading foundry operators stand to benefit from a 25 percent investment tax credit (ITC) on domestic fab projects, The Register reports. The policy is spelled out in a document published by the US Department of Commerce this week, they say.

The Commerce Department communique sheds new light on the government’s plans for disbursing the $50 billion CHIPS Act fund approved this year by Congress. The tax credits accompany $39 billion in grants, cooperative agreements, loans, and loan guarantees available to companies working to advance US semiconductor and supply chain security interests.

The Commerce Department argues the US remains the world leader in chip design and automation tools, but also notes the US is responsible for only 10 percent of global chip capacity and just 3 percent of global packaging, assembling and testing services. The document further points to areas where the US has fallen behind in domestic production, The Register said.

CHIPS Act benefits are not just for US companies

“The United States no longer produces the world’s most advanced semiconductors and has lost the ability to produce key supply chain inputs such as lithography, tools, substrates and some specialty chemicals”, the document reads. The department adds that recent Chinese initiatives to accelerate domestic manufacturing capacity have only served to exacerbate the risk to US supply chains.

The Commerce Department isn’t being picky about which companies are eligible for funding, the article notes. Any company that takes steps to advance the commerce department’s goals is eligible, with the exception of “entities of concern”. Eligible goals include accelerating leading-edge and legacy chip production in the US, research and development into next-generation semiconductor applications, and efforts to develop an adequate workforce to fuel this expansion.

While foreign manufacturers aren’t excluded from receiving funding, the Commerce Department emphasizes that funds must go towards domestic infrastructure and can’t be used abroad.