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Chipmakers eager to receive huge subsidies stood with President Joe Biden as he signed a bill injecting $52.7 billion into their industry today. Executives from companies like Micron, Intel, HP, and Lockheed Martin witnessed the flick of Biden's pen, alongside auto industry leaders and other stakeholders. They are hopeful that these new subsidies will end "a persistent shortage" in memory chips that Reuters reports has affected "everything from cars, weapons, washing machines, and video games."
In total, the CHIPS and Science Act—also known as the Creating Helpful Incentives to Produce Semiconductors for America Act—authorizes up to $200 billion in subsidies over 10 years, should the US decide to continue investing. The long-term vision is to shove the US ahead of China and other invested countries in a global race to become a chip industry leader.
Once the law is enacted, the Department of Commerce will decide on rules for how grants will be disbursed, dictating who gets how much money and for how long. Because advanced semiconductor production that's necessary for chipmaking requires a significant investment of time and money, venture capitalists have been less likely to fund long-term projects. This law positions the federal government to fill that funding gap while advancing highly coveted technology domestically.
Some chipmakers have already announced long-term investments ahead of Biden signing the bill into law, including a commitment from Qualcomm to purchase $7.4 billion worth of semiconductor chips over the next six years from a New York factory. Micron committed even more, setting aside $40 billion to fund memory chip manufacturing. Micron's investment alone would "boost US market share from 2 percent to 10 percent"—an ample recovery that's still relatively modest when compared to the 38 percent market share that the US used to enjoy in 1990.
In addition to federal grants, chip manufacturers are eligible for a 25 percent investment tax credit through the bill. For the entire industry, that's another estimated $24 billion boon, on top of the $50 billion in grants.
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