Report: Some chip firms may oppose current version of CHIPS Act

POLICY

Multiple chip companies could reportedly oppose proposed legislation currently being considered by Congress that would provide funding and investment tax credits for the semiconductor industry. 

The news was reported today by Reuters, which attributed the information to sources familiar with the matter.

Lawmakers are currently considering the CHIPS Act, a bill that would allocate $52 billion in federal funding to the semiconductor industry. Another bill on the agenda is the FABS Act. It would provide investment tax credits to companies building chip manufacturing plants in the U.S. 

According to Reuters, multiple chip companies are considering opposing the current version of the proposed legislation. They’re said to be concerned that the legislation would provide too little support for firms that design chips but don’t manufacture them. The companies in question, today’s report elaborated, may oppose the Senate version of the proposed legislation if it doesn’t include tax credits for chip design. 

Intel Corp. both designs processors and manufactures them using its network of semiconductor production facilities. Many other industry players, however, don’t produce chips in-house. Instead, they rely on external manufacturing partners to produce their processors. Advanced Micro Devices Inc., Nvidia Corp. and Qualcomm Inc. are among the firms that fall into this category. 

One employee of a company considering opposing the legislation told Reuters that Intel could receive as much as $30 billion in subsidies if the CHIPS Act and FABS Act are passed. Providing so much support to Intel without supporting competitors that design chips but don’t produce them is “going to cause problems in the market,” the employee argued.

The Semiconductor Industry Association, an industry group that represents chip companies, has backed the idea of providing more chip design tax credits. The group is supporting a version of the FABS Act introduced in the House of Representatives that would provide tax credits for both semiconductor manufacturing and design.

“We’re encouraged that the legislation is progressing, and we continue to support enactment of $52 billion in CHIPS Act investments and a FABS Act investment tax credit for both manufacturing and design,” the association said in a Friday statement.

Intel has emerged as a central player in the effort to increase chip production capacity. Earlier this year, the company announced plans to build two cutting-edge chip fabs in Ohio at a projected cost of over $20 billion. Intel earlier set aside another $20 billion to build two new fabs in Arizona.

In the long term, Intel may increase its chip manufacturing capacity even further. The company has stated that it could theoretically build six additional fabs at its planned Ohio campus for a total of eight manufacturing facilities. If those additional fabs are built, Intel’s investment in the campus is projected to reach as much as $100 billion over the next decade. 

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