US Reportedly Set to Offer Incentives Worth Billions for Sophisticated Chips

The United States government under President Joe Biden is planning to provide subsidies worth billions of dollars to leading semiconductor companies in the coming weeks. These subsidies are intended to assist in the construction of new factories in the US, according to a Wall Street Journal (WSJ) report on Saturday, January 27.

The WSJ cited industry insiders familiar with the discussions as stating that the upcoming announcements would start the production of sophisticated semiconductors that power military systems, artificial intelligence (AI), mobile phones, and other electronic devices.

Executives are reportedly waiting for announcements to be made before Biden's March 7 State of the Union speech.

chip semiconductor — (Photo: Jeremy Waterhouse / Pexels) Top semiconductor businesses are anticipated to get billions in subsidies from President Joe Biden's government to develop new plants in the US.

Companies That Most Likely to Benefit

Intel is believed to be one of the potential beneficiaries of the subsidies. The company has $43.5 billion worth of projects in the works in four states: Arizona, Ohio, New Mexico, and Oregon.

With a combined investment of $40 billion, TSMC is building two factories close to Phoenix, making it another probable beneficiary. Samsung Electronics of South Korea, which has a $17.3 billion facility in Texas, is also a strong competitor and a likely recipient.

Texas Instruments, GlobalFoundries, and Micron Technology are among the other most prominent rivals, according to industry experts cited by WSJ.

Neither the applicants' identities nor the reports' timing were to be discussed by the US Department of Commerce.

Meanwhile, Reuters cites a Commerce official who said CHIPS awards would be based on projects promoting US economic and national security. The spokesperson for the department emphasized that the process is merit-based and involves difficult commercial discussions.

CHIPS Incentives Program

US Commerce Secretary Gina Raimondo said in December 2023 that she will announce 12 financing awards for semiconductor chips in the following year, some of which may be multi-billion dollar deals that would radically alter the way chips are made in the nation.

The first contract, worth more than $35 million, went to BAE Systems last December. The company will use the money to build a new manufacturing facility in Hampshire to make fighter jet chips. The initiative is a part of the $39 billion "Chips for America" subsidy program that the US Congress authorized in 2022.