CHIPs Act Funding to Require Security and Workforce Plans

February 28, 2023

The Commerce Department on Tuesday announced companies seeking major funding from the CHIPs and Science Act must adhere to specific security and workforce requirements.

In July Congress passed the CHIPs and Science Act, legislation that was aimed at addressing a semiconductor chip shortage and making the U.S. less reliant on other countries like China for manufacturing and offsetting future supply-chain issues.

As a result, Commerce was endowed with $39 billion in federal funding to build new factories and expand production. As the allocation of funds began on Tuesday, Commerce stipulated that all companies asking for funds must show how they plan to develop a local workforce, and firms seeking $150 million or more must also provide affordable and accessible child care for their workers.

As the grants, loans and loan guarantees are aimed not just at reviving domestic chips manufacturing but also at sharpening the U.S. edge in military technology, Commerce Secretary Gina Raimondo stated, “This is fundamentally a national security initiative,” and therefore, “We are not writing blank checks to any company that asks.”

A stipulation of the CHIPs law is that the funding can be clawed back if companies use it for stock buyouts instead of the government’s aims. Major companies that have already launched aggressive expansions tied to the funding include Intel, TSMC, IBM, Micron and Texas Instruments. Altogether their support totals $52 billion so far when coupled with funding for research.

The Biden Administration sees the CHIPs funding as a launching pad to create two major semiconductor clusters inside the U.S. involving a network of factories, research laboratories and other infrastructure.

The multi-year challenge will require job training and figuring out scientific breakthroughs to lower the cost of producing advanced chips. Cooperation will be needed across federal and state governments, local municipalities, CEOs, universities and school districts.

Commerce said companies can start submitting their statements of interest on Tuesday as a first step in a process that will include a draft and a final proposal followed by government evaluation ahead of any awarded CHIPs Act funding.

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