The U.S. government’s long-proposed chip bill has finally reached a critical moment when it will issue a large amount of subsidies. On Monday, U.S. Commerce Secretary Raimondo said that the Commerce Department planned to start related allocations within two months. Raimondo said that very complex and challenging negotiations are currently underway with chip companies. She also promised to make more subsidy-related announcements in the next six to eight weeks.
The total scale of this U.S. chip plan is US$39 billion. These subsidies will fund chip companies to build new factories, reduce production cost pressures, invest in supply chains, and more advanced research. The subsidy limit can reach 35% of the capital expenditure of a single project.
Raimondo added that the investments involved are highly complex and groundbreaking. The projects proposed by TSMC, Samsung and Intel to develop in the United States are unprecedented attempts, both in terms of scale and complexity.
Stabilize people's hearts
The U.S. chip bill was approved by Congress in August 2022, but so far, the U.S. government has only issued two small subsidies from the plan. This has also been criticized by the industry, believing that government approval is too slow.
But Raimondo has always said that the U.S. government’s subsidy process is not lagging behind. However, Intel recently announced that it would postpone the construction of its US$20 billion factory in Ohio, USA. One of the important reasons is interpreted to be that the US government has not released chip aid.
At the same time, TSMC and Samsung Electronics recently announced that they will continue to invest tens of billions of dollars in building new factories in Asia. Analysts believe that this means that these two major semiconductor manufacturers will shelve or slow down their factory construction in the United States to a certain extent.
Although TSMC and Samsung Electronics' factories in the United States may still be profitable, for the United States, it is obviously contrary to its original intention of transferring global chip production capacity to the United States. The root cause may be partly related to the failure of the U.S. government to provide relevant subsidies to TSMC and Samsung Electronics in a timely manner.
This is probably one of the reasons why Raimondo disclosed the subsidy payment time in advance, hoping to stabilize the chip industry's confidence in the United States.
In addition, Raimondo also added that although the chip industry has always had cyclical problems and the current market situation is not good, she believes that artificial intelligence will drive the recovery of chip demand in an unprecedented way.