Texas Instruments Receives $1.6B Grants for Expanding Chip Production

Texas Instruments Secures $1.6 Billion in CHIPS Act Grants to Boost Domestic Chip Production

Texas Instruments has been awarded $1.6 billion in grants from the CHIPS Act, a 2022 law designed to enhance domestic chip production and counter the growing influence of China in the semiconductor market. This funding is part of a larger financial package totaling potentially $6 to $8 billion, which includes loans and tax credits. The investment is set to facilitate the creation of over 2,000 direct manufacturing jobs and numerous indirect jobs in construction and supporting industries.

The allocated funds will be utilized to finalize the construction of three chip fabrication plants (fabs) in Texas and Utah. These facilities will focus on producing 300mm silicon wafers, primarily targeting legacy chips employed in smartphones, appliances, and national defense, aligning with the CHIPS Act's objective to secure the U.S. supply chain and reduce reliance on foreign sources, particularly from China.

Furthermore, Texas Instruments plans to inject $40 billion into constructing new factories in Utah and Texas. However, these facilities are not expected to become operational until after 2030 and will not receive federal funding under the current criteria of the CHIPS Act, which prioritizes projects that can be completed by the end of the decade. The CHIPS Act garnered significant bipartisan support, offering $39 billion in subsidies for domestic chip manufacturing, 25 percent tax credits for manufacturing costs, and $13 billion for workforce training, as emphasized by President Biden to strengthen national security and promote American investment and union workers.

The semiconductor industry is expected to see continued growth, with U.S. manufacturing capacity projected to increase from 12% to 14% by 2032, partially due to these government investments. However, challenges remain, including the global cyclicality of the semiconductor market and ongoing U.S.-China trade tensions, which could impact future sales.

In addition to these financial investments, workforce development remains a critical issue. The CHIPS Act has already created over 36,000 direct jobs, but the industry faces significant talent shortages, with potentially 58% of new roles remaining unfilled by 2030 due to the competitive job market and gaps in STEM education.

Overall, Texas Instruments' expansion under the CHIPS Act is part of a broader trend of reinvigorating U.S. semiconductor manufacturing, which is crucial for both economic competitiveness and national security.

Key Takeaways

• Texas Instruments secures $1.6 billion in CHIPS Act grants and up to $8 billion in loans and tax credits.
• The funding is expected to generate over 2,000 direct manufacturing jobs and substantial indirect employment opportunities.
• Texas Instruments plans a $40 billion investment in new chip fabs in Texas and Utah, concentrating on legacy chips for smartphones and national defense.
• The CHIPS Act aims to diminish U.S. dependence on foreign semiconductor sources, particularly from China.
• Noteworthy recipients include Intel, TSMC, and Samsung, reflecting a widespread industry push for domestic chip production.

Analysis

The influx of $1.6 billion in CHIPS Act grants, along with $3 billion in loans and tax credits, fortifies U.S. semiconductor independence, countering the market dominance of China. These resources will support the completion of three fabs, fostering over 2,000 direct jobs and numerous indirect opportunities. The strategic emphasis on legacy chips bolsters supply chain security, crucial for sectors such as defense and consumer electronics. Texas Instruments' envisioned $40 billion investment post-2030 in new facilities positions the U.S. as a resilient semiconductor hub, albeit without immediate federal aid. This initiative, combined with wider industry efforts, reinforces national security and economic resilience against geopolitical tech shifts.

Did You Know?

• CHIPS Act: The CHIPS Act, or Creating Helpful Incentives to Produce Semiconductors Act, is a U.S. federal law enacted in 2022 to enhance domestic semiconductor manufacturing. It provides substantial financial incentives, including grants, tax credits, and subsidies, to companies investing in semiconductor production within the United States. The primary goal of the CHIPS Act is to diminish the U.S.'s reliance on foreign semiconductor sources, particularly from China, and to bolster national security and economic competitiveness.
• 300mm Silicon Wafers: Silicon wafers serve as the foundational material for manufacturing semiconductors. A 300mm silicon wafer refers to the wafer's diameter, which measures 300 millimeters (about 12 inches). These wafers are utilized in the production of various semiconductor devices, including legacy chips for smartphones, appliances, and national defense. Larger wafers enable the production of more chips per wafer, potentially reducing manufacturing costs and enhancing efficiency.
• Legacy Chips: Legacy chips encompass older or traditional semiconductor chip types that remain extensively used across various industries, including consumer electronics, automotive, and national defense. Unlike cutting-edge AI chips designed for advanced applications like artificial intelligence and machine learning, legacy chips are commonly employed in more fundamental functions, characterized by their established technology and widespread adoption. The focus on legacy chips with the CHIPS Act funding underscores the importance of maintaining a robust domestic supply chain for these essential components.