U.S. chip companies are jockeying to get a piece of the billions of dollars of taxpayer money made available by the CHIPS Act, and the government is putting rules in place so it doesn’t get scammed.
NIST is welcoming public comment on a proposed rule to make sure the funds are not misused and participants are compliant with the terms of the funding agreement.
Another rule prohibits recipients from engaging in research or licensing technologies to entities that “raise national security concerns,” which is a reference to China, Russia and companies on the Entity List. Named entities include telecom company Huawei and the Chinese Academy of Sciences, an academic institution that designs processors.
The U.S. government this week put small technology companies from countries including China, Azerbaijan and Uzbekistan on the Entity List for helping export technology to Russa.
The CHIPS and Science Act, passed in August last year, opens up $50 billion in incentives for U.S. companies to establish new semiconductor factories, workforce development, and research and development efforts. Critics view the CHIPS Act as a misuse of taxpayer money, and a corporate giveaway that adds to U.S.’s growing deficit.
Proponents say the CHIPS Act will create high-paying jobs in the U.S. A local chipmaking infrastructure will also reduce the reliance on chips manufactured in Asia, which makes roughly 80% of the chips.
The U.S. hopes to avoid the fate of China, which got scammed by individuals after it released billions in funding to grow its semiconductor space. The scammers gamed the system and were aware that China’s government was throwing money without acute awareness of how the semiconductor market worked.
The first round of incentives will go toward building “at least two new large-scale cluster of leading-edge logic fabs.” There are three companies vying for those funds, including Intel, TSMC and Samsung, which have announced plans to build cutting-edge facilities.
The other top priorities are to fund factories building the latest DRAM and other chips – such as analog circuits for cars – that were affected by the supply chain shortages over the last few years.
Intel has lobbied hard bring funding to the semiconductor industry, led by CEO Pat Gelsinger, who made appearances at State of the Union addresses, and this year at the World Economic Forum in Davos. Intel is also giving a separate accounting book to its manufacturing operations as it prepares to receive funding from the government.
The CHIPS Act has “clawback” provisions that will allow the U.S. government to recover funding from the private companies in case of violations. Intel is treading a thin line as it maintains China as an important market.
In contrast to what happened in China, the U.S. effort will be tightly regulated, with regular check-ins and audits to make sure companies are complying. About $39 billion of the funds will go to chipmakers establishing factories on U.S. soil.
The NIST document hints that small businesses may not benefit as “as semiconductor device manufacturing is a highly complex, highly capital-intensive industry beyond the technical and financial capability of most small businesses.”
The proposed rules document shared interesting details about the U.S. semiconductor industry based on data from 2019. There were 723 firms in the U.S. semiconductor industry, with 655 companies that had an employee count under 500 employees, of which 251 had about five or fewer employees. The remaining 68 had 500 or more employees.
“Total employment in the sector was 97,617, of which larger establishments with 500 or more employees accounted for over 80 percent,” the document said.
About 150 companies were related to manufacturing, of which 125 companies had less than 500 employees.