US chip manufacturers to face aid cut amidst oversubscription

U.S. Commerce Secretary Gina Raimondo has indicated that most chip manufacturers will receive less government aid than requested, due to an oversubscription of $28 billion funding allocation, as advanced production firms have requested over $70 billion. The Chips and Science Act of 2022 with a budget of $52.7 billion, incorporates a $39 billion plan to support chip production and supply chain developments, thereby facilitating factory construction and production augmentation.

Secretary Raimondo is advocating for companies to accomplish more with fewer resources to facilitate more project funding. As chip companies typically request billions in assistance, Raimondo informed them they may receive less than half of their requested amount, emphasising the need for fiscal discipline.

The department is prioritising projects expected to be operational by 2030. The aim is to boost US production to 20% of global supply, up from none at present. Despite over 600 expressions of interest, Secretary Raimondo clarified that the majority, including many meritorious projects, will not receive funding. The funding awards may comprise grants, loans, and guarantees, covering up to 35% of the project’s total expenses. GlobalFoundries was announced as the inaugural recipient of a substantial $1.5 billion grant.