The Biden administration is preparing to allocate billions of dollars in subsidies to major semiconductor companies for the development of new manufacturing facilities in the United States. This move is part of a broader strategy to boost domestic production of advanced semiconductors, which are critical components in various technologies including smartphones, AI, and defense systems.

Key Points:

1. Recipients of Subsidies: Intel and Taiwan Semiconductor Manufacturing Co. (TSMC) are among the likely beneficiaries. Intel has several projects across Arizona, Ohio, New Mexico, and Oregon, with costs exceeding $43.5 billion. TSMC is working on two plants near Phoenix, with a combined investment of $40 billion. Other contenders include Samsung Electronics with a $17.3 billion project in Texas, and companies like Micron Technology, Texas Instruments, and GlobalFoundries.
2. Timing of Announcements: Industry executives anticipate some subsidy announcements to occur before President Joe Biden's State of the Union address on March 7.
3. Objective of the Subsidies: The subsidies aim to jumpstart the manufacturing of advanced semiconductors in the U.S. to reduce reliance on foreign chip production and strengthen national security.
4. Funding Background: The subsidies are part of the $39 billion “Chips for America” program, approved by Congress in 2022 to encourage domestic semiconductor production. In December 2023, the U.S. Commerce Secretary Gina Raimondo announced the first award of over $35 million to a BAE Systems facility.
5. Strategic Importance: This move is strategically important for the U.S. as it seeks to compete with global tech giants and secure its supply chain in critical technology sectors.
6. Economic and Political Implications: The investment in semiconductor manufacturing is expected to have significant economic benefits, potentially creating jobs and advancing technological capabilities in the U.S. It also has political implications, reflecting a commitment to strengthening domestic industries and reducing dependencies on foreign suppliers, especially in light of recent global supply chain disruptions.