The US Commerce Department says it will strictly control use of subsidies under the recently passed CHIPS and Science Act, which promises to unlock billions of dollars in funding for domestic chip manufacturing.

The eagerly anticipated [1]spending bill paves the way for $280 billion in funding for science and technology, roughly $52 billion of which is earmarked for boosting US semiconductor production. Its passing was greeted by companies such as Intel and [2]Micron , the latter of which promised to ramp up stateside memory production over the next few years in exchange for some of that cash.

However, the Commerce Department has given chipmakers notice that it will not be allowing a free-for-all, and will not let them use government funding for "stock buybacks or to pad their bottom line", it said in a [3]published statement .

[4]

Instead, subsidies awarded will be "no larger than is necessary to ensure a project happens here in the United States", the Commerce Department said, adding that it wanted to avoid a situation where states and municipalities became embroiled in a subsidy competition in the race to attract chipmakers to build there.

[5]

[6]

The Department also warned that it will not hesitate to clawback funds or pursue other remedies from semiconductor companies that are found to have misused taxpayer dollars.

Funding will come with conditions attached: chipmakers that receive a CHIPS subsidy will be prohibited from engaging in “significant transactions in China or other countries of concern” involving any leading-edge semiconductor manufacturing capacity for a period of ten years.

[7]

While the funding decision is being welcomed by the semiconductor companies, the US is by no means the only territory offering subsidies to chipmakers in a bid to boost local chip manufacturing, so the CHIPS ACT may not turn out to be the springboard back to US dominance of the semiconductor industry that some are expecting.

China is said to have already invested $80 billion of a [8]planned $150 billion in government subsidies in its bid to become the global leader in all segments of the semiconductor industry by 2030. South Korea last year announced a [9]package of investments worth over $450 billion for its chip industry, with its eyes also on becoming a global supply chain leader.

[10]Global chip shortage far from over and now semiconductor market faces slowdown

[11]China 'must seize TSMC' if the US were to impose sanctions

[12]EU directs €11bn toward European Chips Act to build homegrown semiconductor industry

[13]Germany makes new move to attract chip manufacturers

Elsewhere, the EU announced the first €11 billion (about $11.2 billion) investment as part of its [14]European Chips Act earlier this year, which is expected to grow to more than €43 billion (about $44 billion) by 2030.

As noted by the Wall Street Journal, this effectively means that countries around the world are involved in a race to subsidize semiconductor manufacturing in order to avoid being left behind by rivals. However, the US government is expected to coordinate with other chip-making countries that are allies to avoid damaging subsidy competitions.

In May, the EU-US Trade and Technology Council (TTC) met to discuss [15]cooperation on semiconductor supply chains between the trading superpowers, and one of the key goals of this was a coordination of policy and to avoid a 'subsidy race’ between the two.

[16]

Additionally, the US is seeking a similar level of cooperation with Japan. Last week, the pair agreed to establish a joint research center for next-generation semiconductors as part of a new high-level economic dialog aimed at countering China’s growing influence and to combat the disruption caused by the Russian war against Ukraine.

According to [17]Reuters , the new research center is expected to be set up in Japan by the end of this year and will initially research 2nm chip technology. The facility will also include a prototype production line and may begin producing semiconductors by 2025. ®

Get our [18]Tech Resources



[1] https://www.theregister.com/2022/07/28/house_chips_act_passes/

[2] https://www.theregister.com/2022/07/29/micron_pledges_us_memory_expansion/

[3] https://www.nist.gov/semiconductors/taxpayer-protections

[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Yuf4sYTy7asVCWkYmJ67wQAAAFY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yuf4sYTy7asVCWkYmJ67wQAAAFY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Yuf4sYTy7asVCWkYmJ67wQAAAFY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yuf4sYTy7asVCWkYmJ67wQAAAFY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[8] https://itif.org/publications/2021/02/18/moores-law-under-attack-impact-chinas-policies-global-semiconductor/

[9] https://www.theregister.com/2021/05/14/south_korea_semiconductor_stimulus/

[10] https://www.theregister.com/2022/07/20/global_chip_shortage_not_over/

[11] https://www.theregister.com/2022/06/07/china_must_seize_tsmc/

[12] https://www.theregister.com/2022/02/08/european_chips_act/

[13] https://www.theregister.com/2022/05/06/germany_chipmaker_subsidies/

[14] https://www.theregister.com/2022/02/08/european_chips_act/

[15] https://www.theregister.com/2022/05/16/ttc_paris_meeting/

[16] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Yuf4sYTy7asVCWkYmJ67wQAAAFY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[17] https://www.reuters.com/technology/us-japan-set-agree-joint-research-semiconductors-media-2022-07-29/

[18] https://whitepapers.theregister.com/