WSJ News Exclusive | Commerce Officials to Detail Chips Act Application Process This Month

As part of the rollout, Commerce Secretary

Gina Raimondo

is scheduled to deliver a speech on Feb. 23 in Washington to outline the Biden administration’s stance on how it plans to use the Chips Act to maintain the U.S.’s technological leadership and protect national security. 

The subsidies are intended to encourage chip manufacturers to build and modernize fabrication facilities in the U.S., and reverse years of manufacturers going abroad to reduce their costs.

Commerce officials say the February announcement will be followed by the release in the spring of information for material suppliers and equipment manufacturers that will be supporting the chip makers.

The Chips Act, signed into law by President Biden in August, allocates $52.7 billion for semiconductor manufacturing to help reduce the U.S.’s reliance on foreign-made chips by shoring up domestic production, and research and development. 

The fund includes $39 billion in manufacturing incentives and $13.2 billion for R&D and workforce development. It also provides investment tax credit to cover 25% of the costs of capital expenses for companies.  

Following the severe chip shortage during the pandemic and amid escalating tension with China, many U.S. lawmakers, policy makers and economists support the efforts to use taxpayer funds to strengthen the domestic semiconductor industry. 

The chip shortage has since eased, and questions remain on Washington’s fresh attempt at industrial policy that gives the government a greater role to determine the future of an industry.

Among them are how the funds should be allocated among companies both American and foreign, how to ensure the international competitiveness of U.S. facilities despite high labor costs, and how to prevent China from benefiting from the program.  

Coordinating subsidy policies among countries to prevent future oversupply is also a task, as the European Union, South Korea and Japan have all rolled out their own policies to incentivize investments in their own chip industries.  

The legislation includes guardrails to ensure that recipients of subsidies don’t build certain facilities in China and other countries of concern. It is also designed to prevent companies from using taxpayer funds for stock buybacks and shareholder dividends.

The U.S. produces roughly 10% of the global semiconductor output—and none of the most advanced chips—while East Asian nations including Taiwan and South Korea account for 75% of the total global production, according to the White House.   

Spurred by the subsidies to be channeled through the Chips Act, a number of semiconductor and equipment makers have already unveiled plans to expand their facilities.

Intel Corp.

has a $20 billion project to build two new fabs in Ohio, while

Taiwan Semiconductor Manufacturing Co.

plans to spend $40 billion to expand its facility in Arizona. 

Write to Yuka Hayashi at [email protected]