Washington, August 16th, 2024, Texas Instruments has been awarded up to $1.6 billion by the Biden administration to build three new semiconductor manufacturing plants. The announcement came on Friday, part of the administration’s effort to boost domestic semiconductor production through the CHIPS Act.
This funding is aimed at helping the Dallas-based company construct two plants in Sherman, Texas, and one facility in Lehi, Utah. The grants, combined with other incentives, are a significant step toward securing America’s supply of semiconductors, vital components used in electronics like smartphones, cars, and computers.
The funding stems from the bipartisan CHIPS Act, which was passed by Congress in 2022 with overwhelming support from both parties. The legislation aims to bolster the production of semiconductors within the United States, reducing reliance on Asian nations.
The Biden administration’s goal is to strengthen the domestic supply chain and avoid the shortages that disrupted industries during the COVID-19 pandemic.
Texas Instruments will also receive an additional $3 billion in loans to assist in building and outfitting the factories. On top of that, the company is eligible for federal tax credits, which could cover up to 25 percent of the cost of construction and equipment.
Altogether, this government assistance supports Texas Instruments’ more than $18 billion investment in constructing the new facilities.
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Texas Instruments is not the only company benefiting from the CHIPS Act. Several other semiconductor manufacturers have received multi-billion dollar awards in recent months, including Intel, Taiwan Semiconductor Manufacturing Company (TSMC), and Samsung.
These grants are part of a broader $39 billion fund that the Commerce Department is using to encourage chipmakers to build and expand facilities in the U.S. So far, more than $30 billion in grants have been announced, and the total federal effort has helped catalyze nearly $400 billion in private investments from semiconductor and electronics companies.
The three new plants that Texas Instruments is building represent a critical part of the U.S.’s strategy to increase semiconductor production. The first Sherman plant broke ground in May 2022, while construction on the Lehi facility began in November 2023.
Together, these plants are expected to create more than 2,000 manufacturing jobs in the coming years. The first Sherman facility is expected to start production in 2025, while the Lehi plant is scheduled to begin operations in 2026.
Laurie E. Locascio, the undersecretary of commerce for standards and technology, emphasized the importance of this investment in a call with reporters. “This funding will advance U.S. economic security and mitigate supply chain vulnerabilities that were brought to light during the pandemic,” she said.
The semiconductor shortages during the pandemic highlighted how critical these tiny chips are to the modern economy. A disruption in supply can bring entire industries to a halt, which is why the U.S. government is now making such a strong push to bring more production within its borders.
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President Biden’s economic policy has been focused on reviving American manufacturing, bringing jobs back to the U.S., and ensuring the country remains competitive in key industries like semiconductors.
His administration believes that increasing domestic chip production is essential not only for economic security but also for national security. The CHIPS Act is a central part of this strategy, aiming to help the U.S. regain its position as a leader in semiconductor manufacturing.
Back in 1990, the United States produced about 37 percent of the world’s semiconductors. Today, that number has dwindled to about 10 percent, with the majority of production now concentrated in countries like Taiwan, South Korea, and China.
The Biden administration wants to reverse this trend and boost America’s share of global semiconductor manufacturing to 14 percent by 2032. This goal is ambitious but achievable with the continued support of federal funds and private investments.
The “CHIPS Act” not only helps semiconductor companies expand their manufacturing capacity but also provides incentives for research and development. This will enable the U.S. to stay ahead in the race to develop new technologies.
Semiconductors are crucial for everything from artificial intelligence and quantum computing to 5G networks and autonomous vehicles. By investing in the future of semiconductor production, the U.S. is ensuring that it remains a leader in the technologies that will shape the 21st century.
Texas Instruments’ new plants are expected to focus on producing current-generation and mature semiconductors. These are the less advanced chips that were in short supply during the pandemic. While much attention is given to the cutting-edge chips used in AI and other advanced applications, the mature chips are equally essential.
They are used in everything from household appliances to medical devices, and the shortages of these chips caused major disruptions across various industries.
In addition to addressing current shortages, the new plants will help ensure that the U.S. has a more resilient semiconductor supply chain in the future. Having a stronger domestic production base means that the U.S. will be less vulnerable to global supply chain disruptions.
This is particularly important as geopolitical tensions continue to rise and the global economy becomes more interconnected.
The Semiconductor Industry Association, a trade group, estimates that the new investments catalyzed by the CHIPS Act will help the U.S. triple its domestic chip manufacturing capacity by 2032.
This will not only boost the country’s share of global chip production but also create tens of thousands of new jobs. The industry is expected to continue growing as demand for semiconductors increases in sectors such as automotive, healthcare, and consumer electronics.
However, despite the progress being made, there are still challenges ahead. Intel, one of the biggest beneficiaries of the CHIPS Act, recently announced that it would be cutting more than 15,000 jobs or about 15 percent of its workforce.
The company cited economic pressures and the slowdown in demand for semiconductors as reasons for the cuts. This raises questions about the long-term viability of some companies in the industry.
Despite these challenges, Intel remains committed to expanding its semiconductor facilities in the U.S., and the federal government continues to support the industry’s growth.
As more companies break ground on new facilities and ramp up production, the U.S. is well-positioned to become a global leader in semiconductor manufacturing once again.
The grants to Texas Instruments are just one part of the broader strategy to revitalize American manufacturing and ensure the U.S. remains competitive in the global economy.
With the continued support of the federal government and private industry, the U.S. can look forward to a future where it plays a central role in producing the semiconductors that power the world’s technology.
