Estimated reading time: 4 minutes
This week has seen massive progress in the USA on the semiconductor chip shortage. Here I will outline what has happened with the chip shortage update.
The Senate has finally passed the CHIPS Act (also known as the Chips and Science Act). This Act provides $52 Billion for the semiconductor industry and has been a long time coming to pass. Now the house is trying to get this on the U.S. president – Joe Biden’s desk for signing into law before they break for their August recess.
What programs is all this money going to be spent on?
This Chips+ production act allows specific projects in the newly revised plan. That total could reach about $200 billion over ten years. To arrive at this destination, congress will have to approve future funds in future spending bills. These will make massive progress and are worthy of a chip shortage update.
So let’s break this down.
The most significant portion is $39 Billion of these funds will go to semiconductor companies to build new FABS or fabrication plants in the U.S. The U.S. Department Of Commerce will have the final say on which chip companies get the money. This money has a timetable of 5 years. In addition, companies that invest in chip plants in the U.S. could also receive a 25% tax credit.
Several companies, including Intel, have previously stated they will open new fabs in the U.S. but have been waiting for this funding package to start construction. Some of these plans have been put on hold while the two houses worked on this CHIPS act. The legislation will put the U.S. in good standing for the future of the chip shortage.
Are there restrictions on who can use this Chip Shortage money?
Also, the companies that receive these funds will have conditions levied upon them. For example, those semiconductors production companies will not be allowed to open or expand facilities in countries deemed a national security threat to the U.S.
The Bill does not specify those countries. The U.S. already deems four countries such a threat, China, Russia, North Korea, and Iran.
The Next Biggest chunk of money is $10 Billion, which will go towards semiconductor research. This research should help in the long term with research and development for the most advanced semiconductors, like those used in Military applications, for example.
Lastly, about $2 Billion is for the basic chips. These are the ones holding up the production of cars and other products reliant on an ever-increasing number of chips. But, again, provisions of the money section will allow these for overseas production. Just not the advanced chips.
But what about the Chips we need now? The Chip Shortage UPDATE
Let me explain how the frustration about how we got into this mess in the first place. First, the USA sent all production overseas and did not dedicate resources and money to this industry.
It will take years to design and construct these new fabs before production can be up to speed. For example, Intel’s new MEGA fab will not be able to produce these advanced chips until 2026! It seems like an insane amount of time to wait.
Many industry experts believe we could see this chip shortage ease up next year or into 2024 at the latest.
The long-term vision for this Act is to keep up with China’s ever-growing investment in chip production.
There are already signs of slowing demand for consumer purchases. For example, the first two years of the Covid Pandemic saw this increase as more people were home and looking for new T.V.s, game consoles, etc.
Chip Shortage software ban? What does this mean?
Breaking news: The U.S. is now looking to implement export restrictions on the semiconductor industry giants’ software to design the most advanced type of chips. Those used in A.I. development, especially in a new emerging field called “Gate-All-Round.”
In a matter of weeks companies will be under the new ban, preventing them from sending this software to China.
Intel, TSMC, and Samsung are chip manufacturers that will soon have a critical engineering tool provided to them by companies such as Siemens, Cadence, and Synopsys who designed the specialized software.
Cadence and Synopsys make around 17% of their profit from customers in China. The new software is so unique that it is currently unknown how much profit they make from it. The future, however, could be huge.
The U.S. already restricts technologies from being exported to China, so this new ban is in line with current policy.