SkyWater

Microchip Plant Construction Boosted by CHIPS and Science Act Funding

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

In August, the Biden administration signed into law the CHIPS and Science Act (H.R. 4346), which provides U.S. semiconductor manufacturers with $52.7 billion over the next five years to increase the production of microchips.

The funding, paired with local and state project-specific tax incentives, is spurring plant construction in Ohio and elsewhere.

The U.S., the country that created the semiconductor industry, currently ranks behind Taiwan in manufacturing volume. The aim of H.R. 4346 is to stem the two-year-plus chip shortage and buoy other related U.S. market sectors including construction.

Intel U.S. Government Relations Vice President Al Thomson says in January 2023 the global company will spend $20 billion on two chip fabrication plants – known as fabs – near Columbus, OH. The new “megafab” site could eventually house a total of eight Intel fabs in a collective construction effort totaling $100 billion. Intel is calling upon all commercial contractors statewide and beyond to build the 7,000-person workforce that will construct the plants, with the goal of opening them in 2025.

Congressional support for the CHIPS Act came in large part due to worries about the U.S. falling behind China in terms of technological leadership and strength, and from concern that without intervention, the U.S. tech industry’s manufacturing capacity would remain second to Taiwan’s.

The European Union’s Chips for Europe initiative, $17.1 billion strong in terms of new funding, echoes the thrust of the CHIPS Act.

Asian competitors are also planning an increase in the manufacturing of microchips. Taiwan Semiconductor Manufacturing Co. is estimated to be investing up to $44 billion in new chipmaking plants and equipment.

A leading driver of chip demand on all fronts was the COVID-19 pandemic, which spiked the demand for work-from-home technology including PCs, tablets and webcams. Chips serving as the brains for other work-life resources such as dishwashers, LED light fixtures and baby monitors added to demand intensity. Play at home devices such as game consoles also fueled increased chip demand since the pandemic began.

Crippling Texas freezes in February 2021 that knocked more than 70 power plants offline and cut power to a Samsung chip plant also magnified the shortage. COVID worker lockdowns worldwide fed into the lack of microchips being produced for the automotive industry and other market sectors.

The CHIPS and Science Act is spurring domestic construction. Indiana-based SkyWater Technology Inc. plans to invest $1.8 billion in a chip research and production facility in Indiana, in partnership with the state and Purdue University. Boise, Idaho-based Micron is planning to build a $40 billion memory chip manufacturing plant. And the partnership of Qualcomm and GlobalFoundries is expected to materialize in a $4.2 billion chip plant expansion in upstate New York.

“Federal investment will enable SkyWater to more quickly expand our efforts to address the need for strategic reshoring of semiconductor manufacturing,” said SkyWater CEO Thomas Sonderman.