This Is How The US $50 Billion Chip Act Works

The US administration has recently passed a $50 billion chip investment plan that aims to support semiconductor producers in the country. Now, we can have a detailed look inside the plan and see where this amount of money will go.

Last month, President Biden signed the CHIPS and Science Act after it was first approved by the Senate and House of Representatives. Following the trade war between the United States and China, as well as the global chip shortage, the importance of investing in the semiconductor industry is vital for the government. Chip manufacturers like Intel and TSMC are also investing in new production facilities.

According to the Commerce Department, this plan will “revitalize the domestic semiconductor industry and spur innovation while creating good-paying jobs in communities across the country.”

The CHIPS and Science Act aims to support semiconductor producers in the US

The total budget is $50 billion, and roughly $28 billion will be allocated to logic and memory chip producers to boost their production. The funds will be distributed through grants and loans, and companies should use the funds to build and expand facilities for making, testing, assembling, and packaging chips.

Additionally, the Commerce Department also distributes $10 billion for producing chips for cars, communications tech, medical devices, defense, and other critical commercial sectors. The chip shortage badly affected the auto industry, and even companies like BMW had to launch their cars without Android Auto or Apple CarPlay. Finally, $11 billion will be spent on research and development.

The companies that want to use the funds must file their application with the Commerce Department in early February. The agency says it will distribute funds on a rolling basis. According to Commerce Secretary Gina Raimondo, the eligible companies can expect to receive their funds by next spring.

Of course, we need to wait a few years to see the real effects of the CHIPS and Science Act on the semiconductor market because production facilities are not built over one night. Putting economic benefits aside, supporting chip production on US soil can even affect US and China disputes over Taiwan, the home of TSMC as one of the great chip manufacturers in the world.