A couple of years ago, the Biden administration introduced the CHIPS Act. Its goal was to strengthen the US’s competitiveness for semiconductor production and development. The government wanted to push a “Made in US” narrative to strengthen the domestic market. It could have been a great opportunity amid trade restrictions on China. However, the CHIPS Act is not achieving its goal due to delays in multi-billion dollar investments.
The initiative sought to finance local developments worth $400 billion. This would be achieved through tax credits, loans, and grants. However, according to an investigation by the Financial Times, 40% of the planned investments remain unfulfilled.
The CHIPS Act investments are not going as planned, report claims
Among projects worth more than $100 million alone, around $84 billion remain unfinished. There are cases where investments have been paralyzed for two months to years, with little optimism about resuming them. In total, there are around 114 large projects affected by the situation, representing around $227.9 billion.
This year, there has been tension between California Democratic representatives and the Biden administration over the cancellation of a chip research and development subsidy program. As a result, the effectiveness of the policies of the current administration has been questioned. Some are even said to be negatively affecting the US position in the market.
The CHIPS Act had big names such as TSMC, Intel, and GlobalFoundries. However, even those companies have been having trouble continuing with planned projects. For example, there is a TSMC plant in Arizona that remains unfinished due to the delay in investments under the CHIPS Act.
The main reasons for the delays
According to the report, there are two main reasons for the delays. First, the political situation in the face of upcoming elections that could turn the whole picture upside down. Under these conditions, companies must be cautious about their decisions. Then, there are the ever-changing and challenging market conditions as the other main reason.
Although the situation does not seem to be the best, there is still optimism about promoting “Made in US” semiconductor developments. The results of the next elections will probably be a turning point in this regard. From there, companies will be able to learn about the plans of the next administration and develop their strategies.
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