The administration of US President Joe Biden announced that it plans to invest $50 billion to launch the semiconductor industry under the CHIPS Act.

According to US Secretary of Commerce Gina Raimondo, approximately $28 billion has been earmarked for increased production of logic and memory chips using advanced processes. The government plans to allocate funds in the form of grants and loans for the construction and expansion of capacities for the manufacture, testing, assembly and packaging of processors.

Authorities are also looking for ways to increase production of old chips. $10 billion will go towards the creation of semiconductors for cars, communications technology, medical devices, defense and other critical business sectors. Another $11 billion will go to research and development.

The government will begin accepting applications in early February 2023. Raimondo said the department could start distributing the funds next spring.

Additionally, federal fund recipients will be barred from building “high-tech” facilities in China for 10 years.

“We will put up barriers to ensure CHIPS recipients do not endanger national security. […]. They cannot use this money to invest in China, they cannot develop advanced technology in China. […] For a period of 10 years,” said Raimondo.

He added that subsidized companies can only expand their mature assembly plants in China to serve the local market.

The ministry is confident that the CHIPS Act will help the US regain the world championship in semiconductor manufacturing. According to the agency, the US is responsible for only 10% of global chip capacity and only 3% of global packaging, assembly and testing services.

“The United States no longer manufactures the world’s most advanced semiconductors and has lost the ability to manufacture important supply chain resources,” the ministry said.

The agency added that China’s recent gains in chip manufacturing have increased the risk of disruption to US logistics and manufacturing processes.

Recall that in July the US Congress passed a law to encourage the production of chips. The authors say the initiative will reduce the US reliance on foreign suppliers, lower the prices of electronics and create thousands of new jobs.

In September, the US Department of Commerce restricted the export of chips used for supercomputers and artificial intelligence to China and Russia. The ban includes Nvidia and AMD products.