The White House said in a statement on Tuesday that the U.S. Department of Commerce has finalized one of the largest chip manufacturing subsidies to date with U.S. memory chip giant Micron Technology (MU.US) to accelerate the "return of chip manufacturing to the United States." The Boise, Idaho-based chip giant announced as early as April that it had signed a preliminary memorandum of terms with the Department of Commerce, ultimately receiving up to $6.14 billion in direct grants under the Chip Act.
It is understood that the more than $6 billion in "Chip Act" subsidies finalized on Tuesday will support the construction of two chip manufacturing plants by US-based storage giant Micron in Clay, New York, and a new chip manufacturing plant in Boise, Idaho, as part of Micron's total investment of up to US$125 billion in the two states over the next 20 years.
In addition, the White House said in a statement that the U.S. Department of Commerce has reached a preliminary agreement with Micron Technology to invest an additional $275 million to expand its memory chip factory in Manassas, Virginia, and develop a key land-based military technology that is core to the country's defense industry, automotive industry and national security community.
“These investments will help the U.S. increase its share of domestic, state-of-the-art memory chip manufacturing from less than 1% today to 10% over the next decade,” U.S. Vice President Kamala Harris said in a statement.
The "Chip Act" provides a total of up to 39 billion U.S. dollars in direct grants, billions of dollars in special loans, and 25% higher tax credits to promote the development trend of the domestic chip manufacturing industry in the United States, promote the "return of chip manufacturing industry to the United States," and especially reduce overreliance on the Asian chip supply chain.
The U.S. Department of Commerce has officially announced preliminary agreements with more than 20 chip companies, and has reached final "Chip Act" subsidy agreements with some companies, including Taiwan Semiconductor Manufacturing Co. The Biden administration is rushing to finalize these deals before President-elect Donald Trump returns to the White House.
President-elect Donald Trump is set to return to the White House in January, adding urgency to the effort as Biden administration officials view CHIP Act subsidies and a push to bring chip manufacturing back to the United States as achievements of their tenure. Although chip companies are not worried that the CHIP Act will end due to Trump's pressure, after all, the bill has been approved by the House and Senate, chip manufacturing giants such as Intel, Samsung and Micron are still eager to avoid the possibility of having to renegotiate terms with the Trump administration.
The Chip Act aims to stimulate high-end manufacturing economic activities in the United States and safeguard national security. The bill was passed by the U.S. Congress with the support of both parties. U.S. government officials have said a final agreement will not be rushed before the transfer of power and will aim to be announced as soon as it is accelerated.
Promoting "chip manufacturing to return to the United States" is an ambition that Biden has been vigorously promoting since he took office. Biden himself regards this process of returning high-end manufacturing as his outstanding political achievement. According to statistics from the Semiconductor Industry Association (SIA), the United States' share of global semiconductor manufacturing capacity has dropped from 37% once reached in 1990 to only 12% in 2020. Therefore, Biden has made the return of chip manufacturing to the United States one of the most important tasks during his term.
It is understood that Trump, who has just announced his victory, has recently violently criticized the "Chip Act". He said that imposing tariffs on foreign chip manufacturers can revitalize the US chip manufacturing industry more than directly providing subsidies. This has triggered concerns in the industry that the US government under Trump's leadership may try to change the initial agreement on the "Chip Act". It also puts tremendous pressure on Biden and other White House officials, who are seeking to reach binding agreements with these chip companies before leaving office.