Third in a series
The rush is on to finalize CHIPS Act contracts among 20 companies that have already received preliminary grants worth $36 billion toward the construction of new fabs.
Companies are worried about what the incoming Trump administration will do with potential reforms to the law, which conveys $39 billion in direct grants as well as loans and 25% tax credits. President-elect Trump has said “the chip deal is so bad” and has noted that Taiwan, home of advanced chip node leader TSMC “stole our chip business.”
In comments to Fierce Electronics, a Commerce Department spokesperson responded to concerns that time is running out to finalize CHIPS contracts before Trump is inaugurated Jan. 20. The spokesperson said the law passed with “overwhelming bipartisan support” and has unlocked more than $400 billion in total investments producing “historic gains in American manufacturing investments.”
The Commerce spokesperson added, “Our team continues to implement this bipartisan law in accordance with the statute, including announcing more than $36 billion in proposed funding for manufacturing and several key R&D components.” Commerce is making more announcements in coming weeks, and Commerce Secretary Gina Raimondo has repeatedly said the funds will be distributed.
Commerce on a website indicates 21 preliminary grants have been made, with one award completed with Polar Semiconductor. Polar’s award of $123 million is small compared to other preliminary grants and will go to double and modernize a manufacturing facility in Bloomington, Minn., within two years where the company makes sensor and power chips.
TSMC and GlobalFoundries have been fortunate to wrap up binding agreements, according to sources that spoke to Bloomberg.
Their negotiated contracts are roughly in line with what they were awarded, which for TSMC in April was $6.6 billion in grants and up to $5 billion in loans to support three chip fabs in Phoenix. GF got $1.5 billion in preliminary grants and up to $1.6 billion in loans in February for a new plant in New York state, and expansions of existing facilities.
Intel has received preliminary grants of more than $11 billion in two separate announcements and is still reportedly awaiting contracts from CHIPS officials in the Commerce Department and NIST. “I believe without the getting the money from the CHIPS Act is it highly unlikely Intel will finish its Ohio fab construction,” said Jack Gold, analyst at J. Gold Associates. “Intel is raising funds from other sources, but the CHIPS funding is a large piece of the incentives for the buildout.”
Intel was not available for comment on Thursday. In the spring, the company said it planned to invest more than $100 billion over five years to expand chipmaking capacity, but since then the company has undergone a $10 billion company-wide cost cutting program that includes 15,000 layoffs.
The industry association SEMI told Fierce Electronics in a statement: “SEMI encourages the US government to continue to execute the programs appropriated under the CHIPS and Science Act of 2022 without unnecessary delays.”