US federal funding could result in up to 10 new chip factories

A proposed $52 billion boost in US federal funding for semiconductor production and research could unlock private capital resulting in up to 10 new factories, according to US Commerce Secretary Gina Raimondo.

The funding was proposed last week by Senate Democratic Leader Chuck Schumer.

The bill includes $39 billion in production and R&D incentives and $10.5 billion to implement programs, such as the National Advanced Packaging Manufacturing Program, National Semiconductor Technology Center, and other R&D programs.

Raimondo said she anticipated the funding would generate "$150 billion-plus" in chip production and research investments, including contributions from state and federal governments and private-sector firms.

She added that she expects states to compete for federal funding for chip facilities and that the Commerce Department would have a transparent process for awarding funding.

A global shortage of semiconductor chips has affected automakers including Ford Motor Co, General Motors Co, and Toyota Motor Corp, who were forced to cut production this year due to the shortage.

US Senator Mark Warner said that while he thought the funds could result in "seven to 10" new plants, it would not solve the problem overnight, adding that it will take years for the Commerce Department to make the investments.

Supporters of the proposed funding noted that the US had a 37 percent share of semiconductors and microelectronics production in 1990, which dwindled to the current 12 percent.

Ford Motor had warned that the chip shortage might cut its second-quarter production by half, costing it about 1.1 million units and $2.5 billion in lost production in 2021.