From Yahoo Finance, April 1:
A vigorous debate has already begun about whether the US semiconductor sector will need a second wave of support from Washington in the years ahead—as well as what it might look like.
Intel (INTC) CEO Pat Gelsinger, one big beneficiary of the 2022 CHIPS and Science Act, weighed in on the topic earlier this month as he announced his company's $8.5 billion government grant for a range of new chip projects.
"I don't think CHIPS 1 is the end of what we need to do to rebuild the industry," he said.
He is far from the only one. Commentary is piling up among business officials, Biden cabinet members, think tank roundtables, and on Capitol Hill as the different players signal their interest as well as the elements they might like to see in a potential second round.
Senator Mark Kelly is an Arizona Democrat who helped negotiate the first bill. He first wants to help chipmakers cut red tape as they build new projects. Then he is open to more after that.
He recently told Yahoo Finance "we need to do things that will make our supply chain stronger, so we're going to assess how this is going and we will figure out what else is needed."
The chatter comes as the current law is just getting underway. But it's a conversation some say needs to happen soon, with most muscular provisions due to expire in a few short years and Washington not known for moving quickly.
"My view is that if they wait 3 to 5 years before they start talking about it, it's going to be way too late," says Caitlin Legacki. She is a former senior advisor to Commerce Secretary Gina Raimondo and notes that the demand for grants has already far outstripped the $50 billion available.
More than 18 months transpired between when the bill that became the CHIPs and Science Act was first introduced and when President Biden signed it into law. And it was another another year and a half with the law on the books before grants began rolling out in earnest.
"In government time, that's like yesterday," Secretary Raimondo joked recently.
In addition to Intel, three smaller manufacturing awards have been announced for BAE Systems (BAESY), Microchip Technology, and GlobalFoundries (GFS).
Giants like Taiwan Semiconductor Manufacturing Company (TSMC) and Micron (MU) are still waiting but are expected to formalize their government awards in the weeks ahead.
The debate over what a second round could look like
The current law covers a range of areas, with $39 billion earmarked for grants to manufacturers and $11 billion set aside for research and development.There are also significant new tax credits around capital improvements that could add billions more to company bottom lines. Other provisions include funds for workforce training efforts, scientific research, and more.
Count Secretary Raimondo as likely to be on board with a second round of support. At a recent Intel foundry event, Gelsinger pushed her on the question. "I suspect there will have to be — whether you call it CHIPs 2 or something else — continued investment," she responded....
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