Biden’s Semiconductor Plan Faces Hurdles as Major Chip Manufacturers Encounter Delays

President Joe Biden’s ambitious plan to boost domestic chip manufacturing, as outlined in the CHIPS Act signed in August 2022, is reportedly facing significant challenges, according to The New York Times. The $39 billion initiative aimed at increasing chip production in the United States is encountering hurdles from major chip manufacturers, including Taiwan Semiconductor Manufacturing Company (TSMC), Intel, and Microchip Technology.

Building chip factories is a complex and costly process, requiring substantial funds and time. Challenges include worker issues, delays in construction schedules, and uncertainties about funding from the Biden administration. TSMC has postponed the completion of its first Arizona factory from 2024 to 2025 due to worker challenges, and the schedule for its second factory’s chip production has been pushed to 2027 or 2028 from the original target of 2026.

Intel’s $20 billion investment in two Ohio factories is now expected to be completed in late 2026 instead of the initially anticipated 2025, influenced by current market conditions. Microchip Technology has reportedly deferred its growth plans, including machinery purchases, until the semiconductor market stabilizes.

While there has been no outright failure in the program, observers stress the importance of seeing progress and actualizing the construction of these chip factories in the next few years for the initiative to be considered a success.

The Biden administration aims to bolster the semiconductor sector in the U.S. and reduce dependence on Chinese-made chips. The Commerce Department, responsible for overseeing the CHIPS Act, is set to distribute significant funds later in the year. However, there have been only three grants issued by the Commerce Department so far.

As the semiconductor plan faces challenges, its progress will likely become a focal point in Biden’s 2024 campaign. Requests for comments from the White House, Commerce Department, TSMC, Intel, and Microchip remained unanswered at the time of reporting.

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