With the midterm elections fast approaching, the Biden administration is under pressure to prove it can use this funding wisely and attract manufacturing investment back to the United States. The Ministry of Commerce is responsible for selecting companies that receive funds and monitoring their investments.
In its strategy paper, the Commerce Department said the United States remains a world leader in chip design, but has lost its leading position in the world’s most advanced semiconductor production. In the past few years, China has taken up a large part of the newly built manufacturing, the newspaper said.
The high cost of building the kind of complex facilities that make semiconductors, called fabs, has prompted companies to separate their facilities for designing chips from those that make them. Many leading companies, such as Qualcomm, Nvidia and Apple, design chips in the United States, but contract to manufacture them with foundries based in Asia, particularly in Taiwan. The White House says the system creates a risky source of dependence on the chip industry.
The department said the funding is intended to help offset the higher costs of building and operating facilities in the United States compared to other countries, and to encourage companies to build the larger type of off-the-shelf products in the United States that are now more common in Asia. Domestic and foreign companies can apply for the funds, as long as they invest in projects in the United States, although the bill prohibits providing funds to any “relevant foreign entity,” a list that would include all companies from Russia and China.
To receive the money, companies will need to demonstrate the long-term economic viability of their project, as well as “indirect benefits” to the communities in which they operate, such as investments in infrastructure and workforce development, or their ability to attract suppliers and customers, the division said.
The ministry said that projects involving the economically disadvantaged and businesses owned by minorities, veterans or women, or based in rural areas, will be given priority. So do projects that help make the supply chain more secure by, for example, providing another production site for high-end chips that are made in Taiwan. Companies are encouraged to demonstrate their ability to obtain other sources of financing, including private capital and government and local investment.
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