Biden to Sign Chips Bill as US Makers Unveil New Investments

(Bloomberg) -- US semiconductor firms are announcing billions in investments as President Joe Biden is set to sign a broad competition bill Tuesday that includes $52 billion in domestic semiconductor research and development.

Micron Technology Inc. will invest $40 billion in memory chip manufacturing, according to the White House, and Qualcomm Inc. is partnering with GlobalFoundries, which has a facility in New York state, in a $4.2 billion agreement to manufacture chips.

Micron on Tuesday said their investments would create up to 40,000 jobs in both construction and manufacturing, well beyond the initial White House estimate of 8,000, and it expects to receive funding through the semiconducter bill.

Micron Chief Executive Officer Sanjay Mehrotra is among the expected attendees at the bill signing ceremony at the White House Rose Garden, along with Intel Corp. CEO Pat Gelsinger, Lockheed Martin Corp. CEO Jim Taiclet, HP Inc. CEO Enrique Lores and the CEO of Advanced Micro Devices Inc., Dr. Lisa Su.

The chips bill is the latest in a slew of legislative wins for the White House in recent weeks. Senate Democrats on Sunday passed a sweeping climate and spending bill -- a slimmed down version of Biden’s Build Back Better agenda, after lawmakers also approved veterans health and gun-safety bills with bipartisan support.

The legislation, now called the CHIPS and Science Act, first passed the Senate in June 2021 but lingered in the House for months, and it took more than one year to reconcile the two chambers’ versions. Some Senate Democrats had criticized the White House for not pushing the House and Speaker Nancy Pelosi to get the legislation over the finish line sooner.

The chips bill is at the center of the Biden administration’s effort to reduce dependence on Asian nations like Taiwan and South Korea, whose homegrown companies are leading the market, and to address supply chain disruptions and resulting price hikes for certain goods containing semiconductors.

Biden’s team and lawmakers have stressed the national security implications of the bill, saying it was vital to competing with and countering China.

A large chunk of the federal grant is expected to go to Intel Corp., Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co., all of which are now building new chip fabrication facilities worth tens of billions in the US.

The bill also includes important caveats sought by Republicans and China hawks: Companies that receive the funding have to promise not to increase their production of advanced chips in China. 

It was a condition made by lawmakers and the White House and was included in the measure over the objection of some chipmakers. Intel, in particular, was lobbying hard against the prohibitions. In late 2021, the American chipmaker wanted to increase production in China but the plan was rejected by the Biden administration.

While China’s chipmaking champion Semiconductor Manufacturing International Corp. can make chips that are more advanced than 28 nanometers, its technology is still at least six years behind industry leader TSMC.