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Congress finally passes $52b subsidies for chip fabs on US soil

Intel and pals can now die happy

The US House of Representatives voted Thursday to approve subsidies for domestic chip manufacturing, and to accelerate scientific research, with the passage of the $280 billion CHIPS and Science Act.

The massive spending bill received overwhelming support in the House, passing in a 243-to-187 vote that saw 24 Republicans break rank to join Democrat Party members in backing the funding. The bill now heads to President Joe Biden’s desk, where it is expected to be signed into law without delay.

The CHIPS and Science Act, which received Senate approval only yesterday, represents the final evolution of a year-long effort to boost US chip production amid the worst semiconductor shortage in recent history and growing concern over the country’s reliance on Asia-Pacific foundries.

Roughly $52 billion of the spending bill [PDF] — known as the CHIPS Act fund — is directed toward the construction of semiconductor manufacturing facilities on US soil. What’s more, among other things, the bill includes provisions for an additional $24 billion in tax credits for companies engaged in domestic chip production.

Many of these facilities are already under construction. Intel, America's largest home-grown chipmaker and foundry operator, has committed to building at least $40 billion in new foundry capacity. It broke ground on a pair of Arizona fabs late last year, and recently held up the groundbreaking ceremony of its upcoming Ohio mega-fab over continued delays to the CHIPS Act’s passage.

"I congratulate Congress on voting to approve funding for the CHIPS Act," said Pat Gelsinger, the x86 giant's CEO, in a canned statement today.

"This is a critical step to support the entire US semiconductor industry and to help ensure continued American leadership in semiconductor manufacturing and R&D. Congress has done its part, and now we are going to do ours. I'm excited to put shovels in the ground as Intel moves full speed ahead to start building in Ohio."

While Intel hopes to snag a sizable chunk of the $52 billion cash pot, it isn’t without competition for the dosh, which Gelsinger at least alluded to. Over the past few years Taiwan Semiconductor Manufacturing Co, better known as TSMC, and Samsung have expanded their US presence, with fabs in Arizona and Texas already under construction.

What’s more, Samsung is said to be planning a massive $200 billion foundry project in the Austin, Texas area that would see 11 fabs constructed over the next two decades.

However, as The Register has previously reported, building new fabs is neither a cheap or speedy prospect. These facilities can cost anywhere from $10-$15 billion a piece and take 3-5 years to bring online if using leading-edge nodes (taking a copy-exact manufacturing approach should be faster). And it's not uncommon for facilities tasked with producing leading-edge processes to need additional time to work out the kinks in assembly.

While a victory for President Biden, who has been a staunch proponent of the bill, he’s unlikely to see the first fabs funded by the bill come online until after the 2024 election.

On top of the chips subsidies and tax credits, the bill also includes approximately $170 billion in funding for US scientific research over the next five years. These funds are aimed squarely at closing the gap with China in both the scientific and technological arenas. The creation of regional technology hubs supporting the development and growth of startups is also enabled by the legislation.

China’s technological and scientific advancements in the face of stiff sanctions and trade restrictions was an oft-cited justification for the bill.

Despite efforts to deny Chinese state-backed chipmakers access to infrastructure and the intellectual property required to produce leading-edge semiconductors, recent reports indicate SMIC — the Middle Kingdom's largest foundry — had recently obtained the means to produce 7nm node parts. This puts the country some generations ahead than previously thought.

The bill’s passage comes as the US attempts to deescalate Chinese aggression towards Taiwan, which remains the primary source of leading-edge silicon for American processor designers, including, AMD, Nvidia, Apple, and Qualcomm.

Last week US Commerce Secretary Gina Raimondo warned that losing access to Taiwan’s fabs would send the US into a “deep and immediate recession.” Hence the need for more factories on Uncle Sam's home turf. ®

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