Several U.S. chip firms are reportedly debating whether to oppose $52 billion in congressional subsidies for chip fab construction if the final deal disproportionately favors Intel and others.
The split in the industry was reported by Reuters, citing two unnamed sources concerned about the advantages that could come to their direct competitors such as Intel.
Fabless chip companies like AMD, Nvidia and Qualcomm that design chips but do not manufacture them would see no direct benefit from subsidies to build plants or tax benefits for production tools. Intel, which wants to build plants in Ohio valued at $20 billion, and other U.S. companies like Micron and Texas Instruments both design and manufacture chips.
Funding has been stalled for months after the U.S. Senate had approved the CHIPS Act while the measure was delayed in the House. When the CHIPS Act funding of $52 billion was recently split from other measures because of opposition from Republicans, it has headed back to the Senate for approval, which could come as early as Tuesday, according to Senate Majority Leader Chuck Schumer.
The Senate also has the ability to vote on a separate measure called the FABS Act that includes an investment tax credit to companies that purchase expensive tools for use inside chip factories. A separate version of the FABS Act introduced in the U.S. House contains the manufacturing tax credit and a tax credit for chip design work, like the kind done by fabless chip firms.
AMD, Qualcomm and Nvidia have reportedly supported that second FABS Act version with the design work credits. The Semiconductor Industry Association, which represents the chip industry at large, also supports that second version for both manufacturing and design, as well as the $52 billion in CHIPS Act investments, the SIA said in a recent statement.
The current Senate version has no design tax credit, which has led some to consider opposing the measure if it comes to a floor vote. Reuters quoted one unnamed person saying, “You have Intel that might get $20 billion with CHIPS Act plus $5 billion or $10 billion under the FABS Act, so $30 billion goes to your direct competitor and you don’t get a penny? That’s going to cause problems in the market.”
Another unnamed person at a second company added, “It’s going to benefit just a few companies,” Reuters reported.
AMD, Qualcomm, Nvidia did not immediately respond to a request for comment but Intel issued the following statement late Monday:
"While leading-edge semiconductor manufacturing is the most capital-intensive part of the industry, with new fabs requiring $10-12 billion of investment each, the CHIPS Act will benefit the entire American semiconductor industry. This includes both manufacturers and the fabless companies that today do most of their manufacturing offshore, and which stand to gain a wider range of cost-competitive, US-based manufacturing options. The CHIPS Act will also benefit all the American industries that depend upon semiconductors for their products."
Intel has said previously it hopes to receive as much as $3 billion for each new fab it builds in the U.S. and has noted the $3 billion per fab is a cap in the legislation. Intel and SIA have also previously argued that the CHIPS Act funds are available to other fabrication providers such as TSMC, Samsung, Global Foundries and others, as long as they build in the U.S. Of the $52 billion, $10 billion is for chip R&D of which some will go to design groups, while another $2 billion is to be spent to support older technology.
Global Foundries CEO Thomas Caulfield on CNBC said he had not heard from from anybody saying the CHIPS Act should not be passed. "I think there's broad support across the industry," he said, noting the global percentage of U.S. manufacturing of chips has dropped to 12% versus about 37% in the 1990s.
RELATED: Intel tells customers to expect price hikes due to inflation, company confirms