Saturday, April 13, 2024

U.S. to give $1.5 billion for computer chip factory, fueling global race – The Washington Post

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The Biden administration will give $1.5 billion to help build a vast new computer chip factory in New York state, part of an effort to boost the nation’s ability to mass produce brains of modern consumer and military electronics.

The grant, officially unveiled Monday, is the third announced under the Chips and Science Act, a $52 billion package signed by President Biden in 2022 in hopes of boosting U.S. manufacturing of semiconductors, which are largely manufactured abroad.

The money will help semiconductor giant GlobalFoundries build a large-scale manufacturing facility, known as a “fabric,” at its headquarters in Malta, NY, to produce advanced chips which are not currently manufactured in the United States. The grant will also help the company expand another factory in Malta, known as Fab 8, and upgrade a third factory in Burlington, Vermont.

The decades-long decline of U.S. chip manufacturing, as companies sought to cut costs abroad, has fueled concern in Washington about the country’s supply chain for tiny electrical components which constitute the foundation of modern life.

Traditional semiconductors, called legacy chips, are used in virtually all modern electronic devices, from phones and computers to refrigerators and washing machines. More advanced chips are expected to power cutting-edge weapons systems and the next generation of artificial intelligence software.

The United States pioneered the technology decades ago but has since lagged behind in producing both types of chips, even as China’s capabilities have soared. Although U.S. factories produced 37 percent of the world’s potato chip production in 1990, their share of production fell to about 12 percent.

Commerce Secretary Gina Raimondo said during a press briefing Sunday that the Chips Act’s “once-in-a-generation investment” was designed to address the country’s overreliance on foreign manufacturers and ensure a local pipeline for chips critical to U.S. industry and defense.

The funding “will play an important role in making the U.S. semiconductor ecosystem more globally competitive and resilient,” GlobalFoundries Chief Executive Officer Thomas Caulfield said in a statement. He added that the industry must next “turn its attention to increasing demand for U.S.-made chips and developing our talented U.S. semiconductor workforce.” “.

The GlobalFoundries grant is the largest announced under the law. Since December, the administration has announced it would give $35 million to BAE Systems, a defense company that makes a chip used in fighter jets, and $162 million to Microchip Technology, a company that makes chips memory and other “microcontrollers” widely used in its factories. in Colorado and Oregon. Additional awards will be announced in the coming weeks, officials said.

Global chip shortages during the Covid pandemic have driven up car prices and shuttered auto factories. U.S. officials have also expressed fears about broader risks to the U.S. supply chain from China’s threats to invade Taiwan, the island where many of the world’s most advanced chips are manufactured.

Today’s chips are made in tightly controlled “clean rooms” by printing circuits on record-sized shiny silicon wafers, a highly sophisticated process that uses some of the most advanced and expensive machines in the world. world. The world’s largest chipmaker, Taiwan Semiconductor Manufacturing Co., or TSMC, said it spent $30 billion on capital expenditures last year.

GlobalFoundries, whose Pentagon “trusted foundry” designation allows it to build high-end hardware for the military, has supplied the chips used in Internet routers, radio towers and satellites as well as the James Space Telescope Webb and the International Space Station. . Its clients include automaker General Motors, defense contractor Lockheed Martin and electronics company Qualcomm.

Of the five largest chipmakers in the world, GlobalFoundries is the only one based in the United States. The other four are based in China, South Korea and Taiwan.

GlobalFoundries applied for Chips Act grants last year, saying the support was necessary for the company to “continue to grow its manufacturing footprint in the United States.” The company will also benefit from the law’s tax credit for investments in advanced manufacturing, which the Congressional Budget Office estimates will be worth about $24 billion over the next decade. .

The federally backed expansions will help GlobalFoundries’ campus in upstate New York, north of Albany, triple its capacity over the next decade to 1 million platelets per year, they said. administration officials said. The grant will also make the Burlington facility the first in the nation to create a next-generation chip for electric vehicles and the power grid.

The Fab 8 upgrade, at the same time, will increase manufacturing capacity for automotive chips used by General Motors, which last year signed a deal with GlobalFoundries granting the automaker an exclusive supply of chips. A single car contains dozens of specialized chips controlling a range of features, from airbags, brakes and reversing cameras to electric car motors and electric seats.

Beyond the $1.5 billion grant, the Biden administration will provide $1.6 billion in loans to GlobalFoundries for construction and modernization. The three projects are expected to total about $12.5 billion, including grants and private financing.

Administration officials gave no timetable for construction. The money, they said, is being committed under a preliminary agreement that will require a period of due diligence before being officially awarded. It will be paid over time according to the stages of the project, and not in the form of a lump sum.

The projects are expected to create about 1,500 manufacturing jobs and 9,000 construction jobs, many of which will be centralized around the new plant, officials said.

Chipmakers complain that the costs of building a new factory — as TSMC is doing in Arizona — are higher in the United States than in Asia, reinforcing the need for government subsidies. They also face a shortage of trained and qualified U.S. employees to perform this delicate work.

The administration said its funds will include about $10 million to support GlobalFoundries’ workforce development measures, which include an apprenticeship program to teach interns to work in a manufacturing plant, no Experience in semiconductors is required.

“It shows that our best days are not over,” Senate Majority Leader Charles E. Schumer, the New York Democrat whose state will benefit from the funds, said Sunday. “We can be competitive, we can understand new changes and adapt quickly. »

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