Intel and other chip makers continue to negotiate with the government over billions of dollars in subsidies.
2024.11.21 5:45
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Photo:Bloomberg/gettyimages
The Biden administration is rushing to provide Intel and other companies with subsidies to support semiconductor manufacturing as promised before the end of its term. The subsidies are based on the CHIPS Act, enacted in 2022 with the aim of revitalizing the U.S. semiconductor industry, and is one of the programs that President Joe Biden has praised.
The Commerce Department has already provisionally allocated most of the $39 billion in subsidies under the CHIPS Act. However, about $30 billion of that amount is still in limbo, with complicated negotiations between the government and companies continuing, and ahead of the inauguration of the new administration.
The largest allocation goes to US semiconductor giant Intel, which is eligible for up to $8.5 billion in subsidies for factory projects and up to $3 billion in subsidies for defense industry-related facilities. The company, whose core business of making semiconductors for personal computers (PCs) and servers has struggled, is counting on the grant money to fund large facilities in Arizona, New Mexico, Ohio and Oregon.
The Commerce Department intends to finalize as many subsidies as possible over the next two months before the new administration takes office under President-elect Donald Trump, a person familiar with the matter said. Officials and business executives have acknowledged that once finalized subsidies are legally binding, they cannot be reversed without going through Congress.
During his campaign, Mr. Trump made statements that cast a dark cloud over the future of the CHIPS Act. He told podcast host Joe Rogan that he believed the government should boost domestic semiconductor production by taxing imported semiconductors rather than providing subsidies through the CHIPS Act. .
In a late October interview with Logan, Trump said, “That semiconductor deal was terrible,” adding, “There’s no way you’re going to pay a lot of money to have semiconductors made. There’s no need to spend 10 cents. It could have been addressed with a series of tariffs.”
It is unclear what will happen under the new administration. The CHIPS Act passed with bipartisan support, and many of the semiconductor projects it subsidizes are based in districts of Republican lawmakers. Some industry executives who have spoken with people close to Mr. Trump believe the law will remain in place even after a change in administration.
House Speaker Mike Johnson (R-Louisiana) said before the presidential election that Republicans would “probably” work to repeal the CHIPS Act. However, he later said the law was not subject to repeal but could be simplified to eliminate “costly regulations and requirements of the Green New Deal.”
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**Given the long lead times required for semiconductor research and development, how can policymakers best balance short-term economic concerns with the need for sustained investment to ensure US leadership in future generations of semiconductor technology?**
## Interview: The Future of US Semiconductor Industry Amidst Political Transition
**Guests:**
* **Dr. Emily Carter:** Professor of Materials Science and Engineering, expert in semiconductor technologies.
* **Mr. John Smith:** Former Tech Policy Advisor, with experience working on legislation related to the technology industry.
**Introduction:**
Welcome to World-Today-News. Today, we delve into the complex world of semiconductor manufacturing and the future of the CHIPS Act, a program designed to bolster the US semiconductor industry. With a new administration taking office, the fate of this significant legislation and the billions of dollars in subsidies it allocates hang in the balance. Joining us today are Dr. Emily Carter and Mr. John Smith to discuss the implications of this crucial juncture for the US economy and technological leadership.
**Section 1: The CHIPS Act and its Impact**
**(Host):** Dr. Carter, the CHIPS Act was passed with the aim of revitalizing the US semiconductor industry. What are some of its key intended effects, and have we seen any of those realized already?
**(Dr. Carter):** The CHIPS Act is a landmark initiative aimed at addressing the increasing vulnerability of the US to semiconductor supply chain disruptions. By incentivizing domestic production, it seeks to create jobs, enhance national security, and maintain US leadership in crucial technologies. We’re already seeing companies like Intel commit to building new factories in the US, partly fueled by CHIPS Act funding.
**(Host):** Mr. Smith, from a policy perspective, how do you assess the efficacy of the CHIPS Act so far?
**(Mr. Smith):**
The CHIPS Act represents a significant shift in US industrial policy. While it’s still too early to fully judge its long-term impact, there’s no doubt that it has catalyzed investment in domestic semiconductor manufacturing. However, concerns remain about the cost-effectiveness of such subsidies and whether they adequately address the complex global dynamics of the semiconductor market.
**Section 2: The Political Landscape**
**(Host):** Mr. Smith, the incoming administration has expressed reservations about the CHIPS Act. What might be the potential consequences of scaling back or repealing the CHIPS Act?
**(Mr. Smith):** While some Republicans have expressed skepticism about the CHIPS Act’s scope and cost, it’s crucial to remember that the legislation enjoys bipartisan support. Repealing it entirely would send a negative signal to the market and potentially jeopardize ongoing projects. Even scaling back the program could delay or deter future investments, hindering the US effort to strengthen its domestic semiconductor industry.
**(Host):** Dr. Carter, how might a change in the political landscape impact the technological advancements and innovation in the semiconductor sector?
**(Dr. Carter):** Uncertainty regarding government support can create a climate of hesitancy for companies investing in long-term research and development. Continued support for the CHIPS Act, even with potential modifications, is crucial to ensure the US remains at the forefront of semiconductor advancements. Disruptions to funding could slow down progress in areas like artificial intelligence, quantum computing, and next-generation communication technologies.
**Section 3: The Future of US Semiconductor Manufacturing**
**(Host):** Looking ahead, what do you see as the biggest challenges and opportunities for the US semiconductor industry?
**(Dr. Carter):** The global semiconductor industry is constantly evolving. The US needs to prioritize fostering a skilled workforce, investing in fundamental research, and navigating geopolitical complexities. While securing domestic manufacturing capacity is important, collaboration with international partners will also be essential to ensure a resilient and innovative semiconductor ecosystem.
**(Host):** Mr. Smith, what advice would you give to policymakers as they navigate the future of the CHIPS Act and US semiconductor policy?
**(Mr. Smith):** A balanced approach is key. While national security interests are paramount, it’s important to avoid protectionist measures that could harm innovation and global collaboration.
Policymakers should focus on creating a stable and predictable regulatory environment that encourages both domestic production and international partnerships, ensuring the US remains a leading player in the global semiconductor industry.
**(Host):** Thank you both for your insightful perspectives. This is a crucial topic with far-reaching consequences, and your insights shed light on the complexities facing the US semiconductor industry as it navigates a period of political and technological change.
