The US Commerce Department has received more than 460 statements of interest for projects in 42 states seeking federal funds or financing help from last year’s Chips and Science Act, with more than a third focused on chip fabrication, according to a department official.
(Bloomberg) — The US Commerce Department has received more than 460 statements of interest for projects in 42 states seeking federal funds or financing help from last year’s Chips and Science Act, with more than a third focused on chip fabrication, according to a department official.
Proposals to the department’s semiconductor investment office will compete for some of the $39 billion in direct funding and $75 billion in loans and guarantees under the law, aimed at reducing US reliance on Asia’s semiconductor supply chains and boosting domestic manufacturing of chip technology.
The measure, signed by President Joe Biden a year ago, will also play a role in his reelection pitch as he aims to convince voters that his economic vision is resulting in real gains for the middle class. “In the year since I signed this legislation into law, companies have announced over $166 billion to bring semiconductor manufacturing back to the United States,” Biden said in a statement.
The Commerce Department has put together a team of about 140 people over the past year spread across two new chips offices, Commerce Secretary Gina Raimondo said on a call with reporters last week. The group will decide where to steer public funds to augment hundreds of billions in private chip investments planned in states including Arizona, New York, Ohio and Texas.
“We can’t afford big mistakes given how high the stakes are,” Raimondo said. “We need to move quickly, but it’s more important that we get it right.”
Read more: US Chip Plans Hit Speed Bump With Key Jobs Taking Months to Fill
The department’s chips investment office expects to announce progress on the projects in coming months, the Commerce official, who briefed reporters on condition of anonymity, told reporters without providing further details.
The investment arm is heavily focused on financial structuring, trying to come up with a combination of grants, loans and loan guarantees that maximizes the pool of funding.
While grants are the main driver of new investment activity, the official said, the office views loan guarantees as an important tool that expands the available funding. Commerce officials say the loans are likely to have interest rates more attractive than private financing options.
Companies that receive grants will get that money over time, the official said, rather than in a lump sum at the beginning of a project. That makes funding conditional on meeting certain benchmarks that will be decided on a case-by-case basis, likely to include workforce development, capital expenditures and customer commitments.
Those areas capture the key priorities the department has outlined in the application process, including technical feasibility, childcare provisions and broader community impact.
One hard-line requirement is that companies receiving public funds can’t expand their investments in China or other countries the US considers of concern.
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