biden administration boosts chip production with major funding
Washington D.C., Tuesday, 10 December 2024.
The Biden-Harris administration is set to award substantial CHIPS Act funding to three semiconductor firms: Coherent, SkyWater Technology Foundry, and X-Fab. This funding aims to expand and modernize semiconductor facilities in Minnesota and Texas. Coherent will receive up to $33 million to enhance its Sherman, Texas facility, adding a new manufacturing line and creating 70 jobs. SkyWater Technology will get $16 million for its Minnesota plant, boosting production capacity by 30% and creating 70 jobs. X-Fab secures $50 million for its Lubbock, Texas foundry, addressing supply chain vulnerabilities and creating 150 jobs. Minnesota has already received $139 million in CHIPS funding, while Texas has seen about $8.1 billion for semiconductor projects. These awards are part of a broader strategy to strengthen U.S. semiconductor manufacturing, potentially impacting global market dynamics and competition with international giants like TSMC.
Strategic investments across key facilities
The latest funding allocation represents a significant expansion of domestic semiconductor capabilities. SkyWater Technology plans a total investment of $320 million through 2026 [1], while X-Fab’s expansion project has a total worth of $200 million [1]. These investments are part of a larger CHIPS Act initiative that has allocated $16.9 billion in proposed funding to 19 companies and finalized $16.3 billion to eight chipmakers since December 2023 [1]. All three companies plan to apply for the advanced manufacturing investment credit, covering 25% of qualified capital expenditures [1].
Market implications and global competition
The funding comes amid intensifying global semiconductor competition, particularly with China. The US government’s export restrictions have prompted strategic responses, with China announcing a 300 billion yuan fund for its domestic chip sector, supplemented by 60 billion yuan from its Ministry of Finance [2]. This development could affect market dynamics, especially considering China’s control over 80% of global gallium production and 60% of germanium production [2], both crucial for chip manufacturing.
Economic and workforce development impact
The investments are expected to create significant employment opportunities, with X-Fab adding 150 jobs in Lubbock, while Coherent and SkyWater will each create 70 positions [1]. The initiative aligns with broader workforce development goals, as evidenced by the HBCU CHIPS Network announced in February 2024 [5]. Commerce Secretary Gina Raimondo emphasizes these grants as crucial for ensuring U.S. military and economic independence in chip production [4].