Semiconductor makers urge passage of federal funding bill for domestic manufacturing

Dive Brief:

Two semiconductor manufacturing heavyweights warned they may have to push back domestic expansion plans as the $52 billion CHIPS Act, a signature piece of pandemic-era legislation aimed at boosting domestic chip production, languishes in Congress.
Intel has postponed a groundbreaking that was slated to take place next month at its $20 billion Licking County, Ohio facility, said William Moss, a senior communications director for Intel.
GlobalFoundries confirmed to Construction Dive that plans for its own plant in Malta, New York, have been overshadowed by the legislative holdup as well, even though the build is currently continuing on pace. “As we've said all along, our schedule will be determined by achieving the right economic model, which includes GlobalFoundries, customer, and government investment and support,” the company said in a statement.

Dive Insight:

Semiconductor supply chain issues in the wake of the the COVID-19 pandemic and the war in Ukraine have caused severe shortages, spurring calls for more domestic production to reduce reliance on foreign manufacturers. The chips are increasingly critical components in products such as phones, cars and computer electronics.

Intel and GlobalFoundries have both said that failure to pass the CHIPS Act would delay their expansion plans in the U.S., according to the Washington Post.

The largest barriers for the legislation, aside from reaching bipartisan compromise in Congress, are the differences in the two separate bills in the Senate and the House, which passed their respective chambers in June 2021 and February 2022.

Lawmakers still have to reconcile those versions. But the House’s bill is currently more than 3,000 pages long and features trade proposals not in the Senate bill, according to Reuters.

Democrats in Congress are hopeful that a deal will happen soon, according to Reuters, but that doesn’t necessarily mean that semiconductor companies can bank on that optimism in the near future.

“It is time for Congress to act so we can move forward at the speed and scale we have long envisioned for Ohio and our other projects to help restore U.S. semiconductor manufacturing leadership and build a more resilient semiconductor supply chain,” Intel said in a statement sent to Construction Dive.

Peter Guinto, the vice president of government affairs for supply chain risk management firm Resilinc, said it’s up to Congress to take action before the midterm elections in November.

Failure to do so would delay the legislation until a lame-duck session in the legislative branch, which risks sending the wrong message to investors, Guinto said.

“It's not good business to make promises that we don't cash for companies who want to bring manufacturing back into our country,” Guinto said.

To be sure, momentum for the builds hasn’t completely stopped. Despite the uncertainty, GlobalFoundries spokesperson Michael Mullaney confirmed to Construction Dive that the company’s Malta, New York facility is still completing preliminary work and is going through the permitting process. And Intel delayed, but hasn’t canceled, its groundbreaking.

And other semiconductor factories are still forging ahead, even without federal subsidies. Two recent projects, both in Texas, include a $17 billion chip plant by Samsung and a $30 billion dollar plant by Texas Instruments.