When it involves distributing prize money from the Biden administration's CHIPS Act, the main focus to date has been on awarding major prizes to large corporations; the lion's share of the $33 billion allocated to date has gone to simply 4 leading semiconductor manufacturers.
Now, with $6 billion left, the main focus is shifting to awarding smaller bonuses to smaller corporations – dozens of them across the availability chain.
The goal, government officials and industry experts say, is to make use of the remaining grants to draw as much private investment as possible while also strengthening supply chain resilience and economic security by financing U.S. sites in areas comparable to materials and packaging.
“We're really focused on investing across the entire semiconductor ecosystem,” Michael Schmidt, director of the CHIPS program office on the Commerce Department, told CNBC.
That means investments might be directed to each upstream suppliers – corporations that provide materials and equipment, for instance – and downstream players, comparable to those involved within the advanced packaging that happens after a semiconductor is manufactured. Schmidt said some current mature technologies, also often known as legacy chipmakers, will likely receive a few of the remaining funds as well.
“Once we start rebuilding that ecosystem in this country, once we start rebuilding the scale that we expect in this country, I think that will create sustained investment and investment momentum and make it attractive for companies to invest in the future,” he said.
The query of where the remaining CHIPS Act prize money will go is increasingly in focus after the Commerce Department announced the recipients of nearly 85 percent of the grants and committed to allocating the remaining funds by the top of the calendar yr.
Hundreds of corporations are still vying for a share of the remaining money: More than 600 corporations initially submitted expressions of interest, Commerce Secretary Gina Raimondo said in February, but to date only nine have been awarded contracts.
Intel, Taiwan Semiconductor, Samsung And micron together received nearly $28 billion, while GlobalFoundries received $1.5 billion and 4 smaller corporations – BAE Systems, MicrochipPolar Semiconductor and Absolics – received a complete of $392 million. Another $3.5 billion was allocated to the “Secure Enclave” program, which is meant to provide semiconductors for military purposes.
The awards announced to date underscore the Commerce Department's give attention to what the industry calls “front-end manufacturing,” or the production of the wafers themselves, says Paul Triolo, director of technology policy at Albright Stonebridge Group.
Triolo attributed this focus to each the “highly political nature of the awards ceremony” and the necessity to show progress in increasing production capability within the near term, he wrote in an email to CNBC.
But Raimondo has accepted to construct out the U.S. chip supply chain from end to finish by 2030. Achieving that may require “significant juggling in awarding contracts to upstream and downstream players in the supply chain,” Triolo wrote.
Schmidt stressed that the Department of Commerce is already focused on providing financial support to all of those players and that there might be “significant investments” along the complete supply chain.
And because the orders announced to date have already led to commitments from private corporations to speculate greater than $300 billion within the production of state-of-the-art equipment, Schmidt expects that “an enormous amount of secondary investment” will soon profit smaller suppliers.
The Department of Commerce has also reserved $500 million in prize money specifically for corporations whose projects have a complete investment of $300 million or less.
“We're going to see those benefits across the industry,” Schmidt said. “And I still think we're going to make very significant investments in the upstream supply chain and really build an overall portfolio that advances economic and national security interests.”
One of those suppliers currently negotiating with Commerce for a CHIPS award is IQE, a UK-based company that produces compound semiconductor wafers for major corporations comparable to Apple.
IQE CEO Americo Lemos told CNBC that while he understands the interest in financing cutting-edge chip production to construct artificial intelligence systems, funding smaller corporations in supporting roles is equally vital to make sure the security and resilience of the U.S. chip supply chain.
“We need to make sure we continually look at the supply chain as a whole, in an environment where geopolitics is not easy to manage,” Lemos said in an interview.
“Of course, the industry is focused on AI, GenAI and their benefits and applications, but it is not enough to build high-performance chips,” he continued. “Without compound semiconductors, there is no AI – that's it.”
As remaining grants turn into increasingly scarce, future grants might be smaller than the multibillion-dollar packages paid out to date, Schmidt said. But for small businesses, even a modest grant could have a big impact.
“You can do a lot with less money for these upstream projects,” says Jimmy Goodrich, senior consultant for technology evaluation on the RAND Corporation. “There's still a lot of room to maneuver.”
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