Texas Instruments Wins $4.6 Billion in Chips Act Grants, Loans

(Bloomberg) -- Texas Instruments Inc. is set to receive $1.6 billion in Chips Act grants and $3 billion in loans, the Biden administration announced Friday, marking the latest major award from a program designed to boost American semiconductor manufacturing. 

The funding will help pay for one factory in Utah and two in Texas — projects that will cost about $18 billion through 2029 — the Commerce Department said in a statement. The effort is expected to generate around 2,000 manufacturing jobs and thousands more in construction.

In total, Texas Instruments plans to spend around $40 billion across both states, including an additional two factories in Sherman, Texas. It’s likely that those will come online after 2030, and the Commerce Department has said it will prioritize projects that will be done by the end of the decade.

Texas Instruments makes a wide variety of chips and has the biggest customer base in the semiconductor industry. In addition to getting grants and loans, it expects to benefit from 25% tax credits from the 2022 Chips and Science Act. That could amount to $6 billion to $8 billion, the company said in a statement.

The Chips Act is the US’s most ambitious foray into industrial policy in more than a generation. It set aside $39 billion in direct grants — plus tax credits, loans and loan guarantees worth $75 billion — to persuade companies to make more semiconductors on American soil after decades of production shifting to Asia. Officials have now allocated the lion’s share of the funding via more than a dozen preliminary awards. They expect to wrap up announcements by the end of this year.

Most of the money is slated to support production of cutting-edge chips by companies such as Intel Corp. and Taiwan Semiconductor Manufacturing Co. But the law set aside a minimum of $2 billion for less advanced semiconductors — sometimes called legacy chips — like those produced by Texas Instruments. With Friday’s announcement, the agency has cleared that threshold. The other major legacy-chip award is a $1.5 billion grant to GlobalFoundries Inc.

Legacy chips are essential to the global economy, powering everything from smartphones to refrigerators to weapons systems. And it’s an area where China is increasing its ambitions. The US and the European Union have become alarmed by Beijing pouring billions into factories making these processors, and Biden announced in May that he’ll double tariffs on the Chinese components to 50%.

The award for Texas Instruments will help ensure “a secure domestic supply of the foundational semiconductors that are the building blocks for nearly every aspect of modern life,” said Under Secretary of Commerce Laurie E. Locascio.