Here’s how $50B in CHIPS money will be spent

Plans for diving up billions in semiconductor research and manufacturing incentives are coming into focus.

The U.S. Department of Commerce laid out a high-level plan for $50 billion in incentives through the CHIPS for America fund, authorized by the CHIPS and Science Act, President Joe Biden signed last month.

On Friday, the president plans to visit Intel’s groundbreaking ceremony for its new $20 billion semiconductor manufacturing facility in Ohio. The tech giant initially stalled plans in July while it waited for the CHIPS and Science Act to be passed.

Michigan’s semiconductor ecosystem has been gaining momentum with state funded dollars. Businesses will have to put forth proposals to get a piece of $50 billion federal funding.

Four primary goals were outlined in the CHIPS for America fund as follows:

  • Establish and expand domestic production of leading edge semiconductors in the U.S., which manufactures 0% of the world’s supply.
  • Build a sufficient and stable supply of mature node semiconductors.
  • Invest in research and design to ensure the next generation semiconductor technology is developed and produced in the U.S.
  • Create tens of thousands of good-paying manufacturing jobs and more than 100,000 construction jobs. This effort will ensure the pipeline expands to include people who have historically not had chances to participate in this industry, including women, people of color, veterans and rural residents.

To accomplish these objectives, money will be distributed into these categories:

$28 billion for ‘leading edge’ domestic manufacturing

The CHIPS incentives program will target approximately three quarters of the funding to establish domestic production of advanced, logic and memory chips.

Money will be made available through grants or cooperative agreements or used to subsidize loans.

Proposals will be considered for the construction or expansion of manufacturing facilities to fabricate, package, assemble and test these critical components, particularly focusing on projects that involve multiple high-cost production lines and associated supplier ecosystems.

$10 billion to expand manufacturing capacity

This money is set aside for older generation chips used in defense and commercial sectors such as automobiles, information and communications technology, and medical devices. Specialty technologies will also be eligible for this pool of grant money.

This category was called “broad and flexible.”

“Creative proposals” are welcome.

The Department of Commerce anticipates dozens of awards with the total value expected to be at least a quarter of the available CHIPS incentives funding.

$11 billion to strengthen research and development

The CHIPS research and development program will invest in the semiconductor ecosystem and require extensive partnerships and sustained investment over many years.

Money is slated to go to the National Semiconductor Technology Center, a National Advanced Packaging Manufacturing Program, up to three new Manufacturing USA Institutes, and for National Institute of Standards and Technology metrology research and development programs.

Specific application guidance will be released by early February 2023. Awards and loans will be made on a rolling basis as soon as applications can be responsibly processed, evaluated and negotiated, according to the Department of Commerce.

Michigan’s semiconductor ecosystem gaining momentum

Michigan companies saw a boost in investment this past week as the SK Siltron facility in Bay County opened its $300 million expansion.

The U.S. subsidiary of the South Korean SK Group produces semiconductor wafers that can be used to make to make microchips for power electronics. These wafers are the building blocks of electric vehicles, solar panels and smartphones.

Nearby at Saginaw County’s Hemlock Semiconductor Operations, the polysilicon producer is looking to expand as well.

To meet rising global demand, the company wants to invest $375 million into an operational expansion and add an estimated 170 jobs.

To support HSC’s expansion, Thomas Township needed to expand sanitary sewer capacity. The township was awarded $27 million to improve infrastructure in support of the project.

The performance-based grant comes from the Michigan Strategic Fund’s Strategic Site Readiness Program.

This is part of the Strategic Outreach and Attraction Reserve Fund, established to help ensure Michigan is chosen for competitive projects instead of other states.

The investment proves Michigan “is serious about prioritizing the growth of high-tech businesses,” said AB Ghosh, Chairman and CEO of Hemlock.

“We built our global reputation on the ability to stay at the forefront of high-tech polysilicon production for the critical semiconductor and solar industries,” Ghosh said. “This investment in local infrastructure supports HSC’s ability to improve and expand our operations and helps us remain globally competitive.”