With the AI boom sending waves throughout the industry, microchip companies and their stocks are logging record profits and production. Nvidia (NASDAQ: NVDA) is the best example of this surge, as it continues to showcase new all-time highs almost every day
And with the new U.S. government funding on the way, microchip producers are set to receive billions more.
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Funding aimed at new factories and increased production
Although yet to be revealed, the upcoming announcements, which should come before President Biden’s State of the Union address on March 7, seek to initiate manufacturing advanced semiconductors, essential smartphone components, artificial intelligence, and weapons systems.
This is a subsequent round of funding under the CHIPS Act, which has previously awarded funding to various microchip producers.
In December, U.S. Commerce Secretary Gina Raimondo disclosed her intention to grant approximately a dozen funding awards for semiconductor chips within the following year. These awards, some of which are expected to be in the multibillion-dollar range, have the potential to reshape chip production in the United States significantly.
The initial award, unveiled in December, amounted to over $35 million and was allocated to a facility operated by BAE Systems (LON: BA) in Hampshire. This facility is dedicated to producing chips for fighter planes. It is part of the broader “Chips for America” subsidy program, which received approval from the U.S. Congress in 2022 with a total budget of $39 billion.
The CHIPS and Science Act, signed into law on August 9, 2022, allocates approximately $280 billion in new funding to advance domestic research and semiconductor manufacturing. Of this sum, $52.7 billion is appropriated. The act includes $39 billion in subsidies for U.S. chip manufacturing and 25% investment tax credits for manufacturing equipment costs.
Additionally, $13 billion is designated for semiconductor research and workforce training to enhance American supply chain resilience and address challenges from China. A substantial $174 billion is also invested in public sector research in science and technology, benefiting entities such as NASA, the DOE, and NIST.