U.S. expected to announce billions in subsidies for advanced chips

The U.S. government is expected to award billions of dollars in subsidies in coming weeks to top semiconductor companies to help build new factories in the U.S., the Wall Street Journal reported on Saturday.

The forthcoming announcements aim to kick-start manufacturing of advanced semiconductors that power smartphones, artificial intelligence and weapons systems, the WSJ reported, citing industry executives familiar with the negotiations.

The executives expect some announcements to come before Biden's State of the Union address on March 7, according to the report.

The U.S. Department of Commerce (DoC) refused to discuss any potential applicants and declined to comment on any timing reports.

"This is a merit-based process with tough commercial negotiations – CHIPS awards will be entirely dependent upon which projects will advance U.S. economic and national security," a department spokesperson said to Reuters citing a DoC official.

In December last year, U.S. Commerce Secretary Gina Raimondo said she would make around a dozen funding awards for semiconductor chips within the next year, including multi-billion-dollar announcements that could drastically reshape U.S. chip production.

The first award was announced in December, of over $35 million to a BAE Systems facility in Hampshire to produce chips for fighter planes, part of a $39 billion "Chips for America" subsidy program approved by the U.S. Congress in 2022.

Among the likely recipients of the subsidies, Intel has projects underway in Arizona, Ohio, New Mexico, and Oregon that will cost more than $43.5 billion, the paper said.

Another likely recipient, Taiwan Semiconductor Manufacturing Company (TSMC) has two plants under construction near Phoenix for a total investment of $40 billion. South Korea's Samsung Electronics, also a contender, has a $17.3 billion project in Texas.

TSMC declined to comment while Intel did not respond to a request.

Micron Technology, Texas Instruments and GlobalFoundries count among other top contenders, WSJ added citing industry executives.

(With input from Reuters. Cover via CFP.)