US to provide hundreds of millions to support computer chip production

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The Biden administration is providing $162 million (€147.9 million) to Microchip Technology to support the domestic production of computer chips – the second funding announcement tied to a 2022 law designed to revive US semiconductor manufacturing.

The incentives announced on Thursday include $90 million (€82.2 million) to improve a plant in Colorado Springs, Colorado, and $72 million (€65.7 million) to expand a factory in Gresham, Oregon, the US Commerce Department said.

The investments would enable Microchip Technology Inc, which is based in the state of Arizona, to triple its domestic production and reduce its dependence on foreign factories.

Much of the money would fund the making of microcontrollers, which are used by the military and in autos, household appliances, and medical devices.

Government officials said they expected the investments to create 700 construction and manufacturing jobs over the next decade.

Semiconductors are a key component of products we use daily such as smartphones and laptops.

Chips to become a trillion dollar industry

According to a report by consultancy firm McKinsey & Company, they are projected to become a one trillion dollar industry by 2030.

Lael Brainard, director of the White House National Economic Council, emphasised that the funding would help to tame inflation.

“Semiconductors are the key input in so many goods that are vital to our economy,” said Brainard, adding that greater US production of chips would have reduced the supply problems that caused the cost of many goods to rise as the country emerged from the coronavirus pandemic in 2021.

The inflation rate has since eased, but the scars caused by the sudden price increases have damaged President Joe Biden’s public approval.

In August 2022, the US president signed the bipartisan CHIPS and Science Act, which provides more than $52 billion (€47.5 billion) to boost the development and manufacturing of semiconductors in the United States.

The EU passed the European Chips Act in 2023, which mobilises €43 billion of investment to increase Europe’s global market share in semiconductors from 10 per cent to 20 per cent by 2030.