Biden administration reveals details of its $50 billion chip investment plan

The Biden administration has explained how it plans to invest $50 billion to launch the US semiconductor industry a month after President Joe Biden. The Commerce Department says the funding will “revitalize the domestic semiconductor industry and spur innovation while creating high-paying jobs in communities across the country.”

More than half (approximately $28 billion) of the CHIPS for America Fund is earmarked to advance the production of logic and memory chips in the United States using the most advanced processes available. The agency plans to disburse the funds through grants and loans that will be used to build and expand chip manufacturing, testing, assembly and packaging facilities.

The government also wants to ramp up production of older chips. Approximately $10 billion goes into building semiconductors for automobiles, communications, medical devices, defense and other important sectors of the economy. In addition, the Commerce Department says $11 billion of the funds will go to research and development.

The agency plans to start accepting applications from the beginning of February. It states that loans and grants will be made on an ongoing basis once applications can be “responsibly” processed, assessed and negotiated. This was announced by Trade Minister Gina Raimondo that the department could begin releasing the funds as early as next spring.

It is expected to take several years before the domestic production of chips increases significantly because it takes time to build or expand semiconductor factories. The impact of the CHIPS and Science Act, which could help mitigate the fallout from US-China tensions over Taiwan, where more than two-thirds of the most advanced semiconductors are built. The Commerce Department notes that the US currently accounts for “zero percent” of the world’s supply of advanced semiconductors, although many are being developed in the country.

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