Texas Instruments on track to secure $1.6 billion in CHIPS Act funds to build three new wafer fabs

[Skye Jacobs]

Why it matters: When the pandemic rolled through the global economy four years ago, it became clear to US officials that they had let its domestic semiconductor manufacturing capabilities deteriorate to dangerous levels. Hence the seeds of the CHIPS and Science Act were planted. The Act was allocated a total of $52.7 billion when it was signed into law in August 2022 and it has been doling out money out ever since. The latest recipient will likely be Texas Instruments, which has plans to use the funding to enhance its footprint in high-volume 300mm wafer capacity.

In a move aimed at bolstering the US' semiconductor manufacturing capabilities, Texas Instruments and the US Department of Commerce have signed a preliminary agreement outlining potential terms for up to $1.6 billion in proposed direct funding under the CHIPS and Science Act.

This funding would support the construction of three 300mm wafer fabrication facilities in Texas and Utah. Alongside this, TI anticipates receiving an additional $6 billion to $8 billion from the US Department of Treasury's Investment Tax Credit, designed to incentivize qualified US manufacturing investments. Together, these financial boosts are set to help TI secure a geopolitically stable supply of essential analog and embedded processing semiconductors.

The proposed direct funding is a part of TI's ambitious plan to invest over $18 billion through 2029 to expand its manufacturing footprint.

The CHIPS Act funding will be allocated to three new wafer fabs: two in Sherman, Texas, and one in Lehi, Utah. The Sherman facilities, SM1 and SM2, are poised to become major players in the semiconductor industry, producing 65nm to 130nm chips with an expected daily output exceeding one hundred million chips. Notably, the Sherman site stands out as one of the few greenfield production sites for 300mm wafer chips in the United States.

Meanwhile, the Lehi, Utah facility, LFAB2, is set to produce 28nm to 65nm analog and embedded processing chips, with an anticipated daily production of tens of millions of chips. This project marks the largest economic investment in Utah's history.

TI is one of the few companies in the US building high-volume 300mm wafer capacity for foundational technologies. Its efforts are crucial to increasing domestic manufacturing capabilities for mature-node chips, which are essential for a wide range of applications, from consumer electronics to critical infrastructure.

The company's investment aligns with broader national efforts to revitalize the US semiconductor industry, which has seen its share of global production decline from 37% to just 12% over the past three decades.

It took the COVID-19 pandemic to expose the impact of this decline with its disruption of the global semiconductor supply chain, which particularly hurt the US automotive, industrial, and defense sectors. These industries rely heavily on semiconductors for their operations, and the disruptions caused by the pandemic led to severe production slowdowns and increased costs.

For instance, the US automotive industry faced production halts and furloughs due to chip shortages, contributing to a sharp rise in vehicle prices and impacting the overall economy. The shortage was so severe that it reportedly knocked a full percentage point off the US GDP in 2021.

By focusing on building robust domestic production capabilities, TI and other industry leaders hope to build a more resilient and self-sufficient supply chain. This strategy will help avoid future disruptions and support the country's long-term economic growth and technological progress.

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Texas Instruments on track to secure $1.6 billion in CHIPS Act funds to build three new wafer fabs

 

[RudyBob]

Why not California and New York?

 

[seeprime]

Good! Giving money to foreign companies to build plants is unwise. Just look at how Foxconn conned billions from US for a new plant in Wisconsin that turned out to be scam. https://www.jsonline.com/story/mone...n-wisconsin-and-how-we-got-there/70037738007/

 

[gamerk2]

Good! Giving money to foreign companies to build plants is unwise. Just look at how Foxconn conned billions from US for a new plant in Wisconsin that turned out to be scam. https://www.jsonline.com/story/mone...n-wisconsin-and-how-we-got-there/70037738007/

Which is why it's important to have oversight, rather then the GOP approach of giving away money and touting "mission accomplished".

 

[p51d007]

Why not California and New York?

Because:
A. Too many regulations
B. Not enough people would work
C. It's NEW YORK!

 

[mailpup]

Because:
A. Too many regulations
B. Not enough people would work
C. It's NEW YORK!

Don't forget high taxes.

 

[wiyosaya]

Don't forget high taxes.

Don't forget Micron in Syracuse, NY.

I'm sure TI has their own reasons, like, for instance, they might be able to get away with polluting more in Texas.

 

[wiyosaya]

Which is why it's important to have oversight, rather then the GOP approach of giving away money and touting "mission accomplished".

And putting Tariffs on imports from China that all US citizens who buy such goods pay while still supporting Chinese manufacturing, and where did the "windfall" from those Tariffs go?

Personally, I'd rather see this approach which actually helps manufacturers re-establish US leadership in chip manufacturing rather than dubious Tariffs which come directly out of the pockets of people wanting goods manufactured in China and, as a consequence, still supports Chinese manufacturing in the name of profits.

The honeymoon of Cheap Chinese produced Crap is over, IMO, and its time for the US actually retake its lead rather than pretend Tariffs on Chinese imports do something meaningful.

 

[Theinsanegamer]

And putting Tariffs on imports from China that all US citizens who buy such goods pay while still supporting Chinese manufacturing, and where did the "windfall" from those Tariffs go?

Personally, I'd rather see this approach which actually helps manufacturers re-establish US leadership in chip manufacturing rather than dubious Tariffs which come directly out of the pockets of people wanting goods manufactured in China and, as a consequence, still supports Chinese manufacturing in the name of profits.

The honeymoon of Cheap Chinese produced Crap is over, IMO, and its time for the US actually retake its lead rather than pretend Tariffs on Chinese imports do something meaningful.

Tariffs are part of encouraging US manufacturing. Sorry you dont like them, but that's fact. Every other country has tariffs on products the US makes.

Don't forget Micron in Syracuse, NY.

I'm sure TI has their own reasons, like, for instance, they might be able to get away with polluting more in Texas.

Or, it could be the multitude of options already listed.

 

[gamerk2]

And putting Tariffs on imports from China that all US citizens who buy such goods pay while still supporting Chinese manufacturing, and where did the "windfall" from those Tariffs go?

Personally, I'd rather see this approach which actually helps manufacturers re-establish US leadership in chip manufacturing rather than dubious Tariffs which come directly out of the pockets of people wanting goods manufactured in China and, as a consequence, still supports Chinese manufacturing in the name of profits.

The honeymoon of Cheap Chinese produced Crap is over, IMO, and its time for the US actually retake its lead rather than pretend Tariffs on Chinese imports do something meaningful.

My solution:

Low-import goods from elsewhere if "fine"; it forces local business to remain competitive. What is *not* find is local business outsourcing production to lower costs, then re-importing back to the US.

If you want to manufacture in China for sale elsewhere, fine. If China wants to flood the market with cheap goods, fine. If an American company wants to re-import goods to America? 100% tariffs.

China isn't the problem; outsourcing to China is. If you punish China, all these companies will do is what they've been doing: Move to the Philippines, Thailand, Vietnam, or wherever else cheap import-free labor is to be had.

 

[p51d007]

Don't forget high taxes.

I figured that was a given LOL

 

[toooooot]

China isn't the problem;

A second military power whose regime has drastically different values compared to Western's is not?
This is a careless statement. Also, helping Philippine's economy is not optimal but is 100 times better than helping China.

 

[gamerk2]

A second military power whose regime has drastically different values compared to Western's is not?
This is a careless statement. Also, helping Philippine's economy is not optimal but is 100 times better than helping China.

The discussion was limited in scope to "purely" economics. What's best for American workers and consumers and what's best for limiting China's ambitions end up being two *very* different things.

 

[wiyosaya]

Tariffs are part of encouraging US manufacturing. Sorry you dont like them, but that's fact. Every other country has tariffs on products the US makes.
Or, it could be the multitude of options already listed.

You might not like my reminding you of this, but we had several years of tariffs under the previous administration. What about those inspired or even remotely encouraged US Manufacturing. Oh, right. Nothing about those tariffs encouraged or inspired US manufacturing. Any company paying those tariffs simply passed them along to their customers, and customers/companies got nothing out of it.

It took this Chips Act, which was bipartisan in nature, to inspire and encourage US Manufacturing. Those with enough integrity to actually do something with the money other than BS and then whine about high-costs, such as TI and Micron to make it a reality. I highly doubt that tariffs alone would have inspired either TI or Micron to do anything WRT increasing their US Manufacturing footprint.

So, since other countries do it, the US should, too? Are the tariff-based efforts at keeping/inspiring in-country manufacturing of other countries working? I doubt it. And, to be a bit over-the-top about it, if you see someone ushering people to jump off a cliff, would you simply just follow along and jump off that cliff?

Tariffs have never worked in the way that those who implemented the tariffs thought they would work. So, the US should just follow along and keep doing the same thing over and over again and expect different results? IMO, that is not the way to "Make America Great Again" by demonstrating the insanity of repeatedly doing the same things over and over and expecting different results.

Leadership, as a country, is what the US is currently doing by restricting technological exports to China (which has had a detrimental effect on the Chinese economy - unlike the tariffs), and providing actual incentives to US chip manufacturers to build new fabs in the US rather than talking points to make people think that the US is doing something positive - AKA Tariffs.

And who Gives AF, where they build the plants? Oh, people who live in states where the plants are not being built. If you want a job at one of those plants and think you are qualified, apply for a job, and move to the state - regardless of how long you think you will have to keep your nose plugged to avoid the stench that does not match your politics.

I am sure that the people who live where TI intends to build will be happy to have the jobs in their region, just like I am sure that the people in Syracuse NY will be happy to have the jobs that Micron is bringing to the region. NY happens to have one of the better, if not the best, University-supported Chip fabrication research programs in the US, not to mention several top universities in the area where the plant is being built that can supply well-educated employees for their venture, and Micron made this part of their decision to build their fab in Syracuse, NY.

And unlike TSMC, Micron and TI are not expecting their employees to work 16-hour days and then P&Ming because "US workers are lazy" and also claiming it is costing them too much.

 

[wiyosaya]

If you want to manufacture in China for sale elsewhere, fine.

I disagree. Why? Because China does not care about IP. China will gladly copy any and all IP that a company brings to China and then tell the company it STOLE it from to go F-themselves. China has been doing this all along and that is a major complaint of companies in the US that have given work to China. IMO, manufacturing in China would be yet another example of doing the same thing over and over and expecting different results.

If China wants to flood the market with cheap goods, fine. If an American company wants to re-import goods to America? 100% tariffs.

As I see it, those tariffs would be passed along to the company's customers - and with products not available elsewhere, the customers would pay that price even though those customers would not like it. The company, itself, is certainly not going to pay the tariffs.

China isn't the problem; outsourcing to China is. If you punish China, all these companies will do is what they've been doing: Move to the Philippines, Thailand, Vietnam, or wherever else cheap import-free labor is to be had.

That's why an incentive program like The Chips Act is trying something different. It may not work, but tariffs have never worked in the way that people would like them to. If the Chips Act does not work, the smart thing, IMO, would be to try something different yet again, and keep trying until something is found that does work and not falling back on things KNOWN to not work.

Maybe I'm wrong, but as I understand it, the US gives tax incentives to companies that outsource jobs and manufacturing. What sense does that make?

The Chips Act is the smart thing to do, IMO, because it incentivizes creating jobs in the US.

 

[gamerk2]

I disagree. Why? Because China does not care about IP. China will gladly copy any and all IP that a company brings to China and then tell the company it STOLE it from to go F-themselves. China has been doing this all along and that is a major complaint of companies in the US that have given work to China. IMO, manufacturing in China would be yet another example of doing the same thing over and over and expecting different results.

IP theft I view as a separate issue from manufacturing, but yes, is a concern.

As I see it, those tariffs would be passed along to the company's customers - and with products not available elsewhere, the customers would pay that price even though those customers would not like it. The company, itself, is certainly not going to pay the tariffs.

Correct, especially if the tariffs are small. But if you want manufacturing here in the US, you have to force the issue, hence my 100% tariff on re-imports. And I stress: ONLY on re-imports by American companies. The point is to disincentive outsourcing without harming external competition (which is typically good and presents a lower-cost option for consumers).

That's why an incentive program like The Chips Act is trying something different. It may not work, but tariffs have never worked in the way that people would like them to. If the Chips Act does not work, the smart thing, IMO, would be to try something different yet again, and keep trying until something is found that does work and not falling back on things KNOWN to not work.

Lack of direct investment is why the US has been lagging since the late 70s; something like the Chips Act was *long* overdue.

Maybe I'm wrong, but as I understand it, the US gives tax incentives to companies that outsource jobs and manufacturing. What sense does that make?

Because we're still stuck in the mindset of "profits = jobs" that we drunkenly talked ourselves into during the Raegan years.

The Chips Act is the smart thing to do, IMO, because it incentivizes creating jobs in the US.

And long overdue.