Pentagon Eyes Benefits of CHIPS Act


Commerce Secretary Gina Raimondo | Image by lev radin/Shutterstock

The U.S. Department of Commerce (DOC) announced on Tuesday that it has taken its first step toward moving advanced semiconductor manufacturing back to the United States.

The U.S. military, which requires semiconductors for a number of modern weapons systems, is paying close attention to the rollout. The Pentagon, as well as other defense and intelligence experts, will be working with the DOC on the implementation of the CHIPS Act, as The Wall Street Journal reported.

As outlined in a DOC press release on February 28, semiconductor manufacturers may now apply for $39 billion in taxpayer-funded incentives earmarked by the CHIPS Act.

Proposals should aim “to construct, expand, or modernize commercial facilities” for the manufacturing of semiconductors, per the DOC. CHIPS Act disbursements are meant to complement other sources of funding and will be dispensed as direct funds, federal loans, or federally secured third-party loans.

This is the first of several funding opportunities, with another expected to open later this spring that focuses on semiconductor materials and equipment facilities and yet another in the fall centered on research and development facilities, according to the DOC.

The CHIPS Act aims to create at least two manufacturing clusters for leading-edge semiconductors by 2030, as well as to train 100,000 new technicians over the next decade. The bill allocates a total of $53 billion in taxpayer funds to these ends.

According to reporting by the WSJ, likely locations for these clusters include Arizona, Texas, and Ohio.

The CHIPS Act, signed into law in August, comes amid an intensifying rivalry with China and exposed vulnerabilities in the supply chain, as The Dallas Express has previously covered. These have raised concerns among policymakers that the U.S. is too reliant on imported chips.

This week’s announcement comes on the heels of a recent speech by Secretary of Commerce Gina Raimondo at Georgetown University, discussing the CHIPS Act in relation to national security.

“So many of our defense capabilities — like hypersonic weapons, drones, and satellites — depend on a supply of chips that aren’t currently produced in America,” Raimondo said.

Some supporters of the CHIPS Act program also point to how companies receiving over $150 million in grants must pay the government a share of their profits if they exceed profit projections, per Reuters.

Another DOC provision will require subsidy recipients to provide child care for qualified workers.

Some have criticized such measures, casting them as examples of federal overreach. For instance, Rep. Frank Lucas (R-OK), who chairs the House Science Committee, criticized these provisions, saying that the DOC is “focusing less on the urgent need for chip production and more on attempting to impose their labor agenda on this critical industry,” as reported by Reuters.

The U.S. is not the only country to target chip manufacturers through incentivizing programs. The European Union, Japan, and South Korea have taken similar measures to boost their own production of semiconductors, as the WSJ reported.

Both domestic and foreign firms may seek taxpayer funds under the CHIPS Act, including South Korea’s Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. (TSMC). Samsung Electronics is already constructing a $17.3 billion chip plant in Texas and TSMC is planning a $40 billion facility in Phoenix, Arizona, according to the WSJ.

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