9 Governments Set to Fund New, Localized Chip Fabs Leave a comment

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Carlos Pardo, CEO and co-founder of optoelectronic device maker KDPOF, plans to build the first commercial chip facility in Spain with money from a European Commission fund set up to make the region more digitally independent, he told EE Times. His is just one of many efforts funded by governments around the world, including the European Union, to achieve self-reliance.

To build his factory, Pardo in June won a chunk of the $9 billion Important Project of Common European Interest (IPCEI) on Microelectronics and Communications Technologies fund. He estimates the cost to be $58 million for a completely automated fab for packaging and testing.

The IPCEI money will also enable KDPOF, a supplier of high-speed connectivity over fiber optics in harsh environments, to conduct R&D on a new line of products that will be the first produced in the new facility, he said.

“We plan to develop a new generation of products for very high speeds,” Pardo said. “Right now, our company is producing for the automotive industry optical transceivers for one-gigabit communications. The next generation is up to 25 gigabits, so it’s a big step forward for having very reliable and low-cost optical communication systems.”

—Part of this EE Times series: A Vulnerable U.S. Electronics Supply Chain.

Other articles in the series include: Reshoring Chip Industry Risks Failure With Just More Fabs; Experts: U.S. Military Chip Supply Is Dangerously Low; U.S. Crawls Toward Rebuilding Frail PCB Industry; USA Rare Earth Aims to Break China’s Grip; GF, Lockheed Martin Pair Up to Improve National Security; 3 Governments Investing in New Fabs Pledge Cooperation; PCB Association Presses Washington for Lifeline; Chip Experts See Talent Shortage as Main Growth Hurdle; Former U.S. Officials Urge New Export Alliance on China; and Intel CEO Warns About CHIPS Funds, Export Controls.

The IPCEI fund is one of many set up globally to reduce reliance on imported semiconductors amid an emerging cold war between China and the U.S.

According to data from government websites and other sources indicated, the following nine governments are striving to become more independent for their high-tech computing and communications needs:

• China: $143 billion—China considered $143 billion in chip-industry subsidies, according to Reuters. However, Bloomberg reported in January that the plan was on hold.
• European Union: $47 billion—The EU will allocate $47 billion in government investments under the European Chips Act, which is expected to attract $16 billion in private money: $9 billion in state aid, triggering $15 billion in private investment in the IPCEI on Microelectronics and Communications Technologies. The Chips Act and IPCEI are to address semiconductor shortages and strengthen Europe’s technological leadership. The Chips Act’s goal is to double the EU’s share of the global chips market by 2030, from 10% to 20%.

• India: At least $922 million—Semicon India aims to provide financial support to companies investing in semiconductors, display manufacturing and the design ecosystem to facilitate India’s growing presence in global electronics supply chains. The program is to provide financial support of 50% of project costs to new business units or expansion/modernization/diversification of an existing unit.
• Japan: Unspecified amount of at least $6.5 billion—The Act on Promotion of Economic Security by Integrated Implementation of Economic Measures, a.k.a. the Economic Security Promotion Act, in part allocates funds for development of cloud technology, with an eye toward A.I., and supporting the semiconductor supply chain. The Japanese government hasn’t publicly said how much subsidy money it will provide. However, on June 16, Japan’s minister of economy, trade and industry said subsidies of about $391 million will be given for eight projects, including subsidies of up to $126 million to Shinko Electric Industries, a manufacturer of semiconductor package substrates, and support totaling up to around $48 million to Sakura internet for its cloud programs. In addition, TSMC’s new $8.6 billion chip fab in Japan will receive a subsidy accounting for 40% of the cost ($3.44 billion), according to a Foreign Policy Rapidus will get a subsidy worth about $2.5 billion, according to a Reuters report.
• Malaysia: Unspecified amount—Malaysia offers a range of tax and other incentives for foreign investment in manufacturing and priority sectors, such as semiconductors, according to the U.S. Congressional Research Service. The government offers companies in priority sectors a five-year, partial income tax exemption on 70% of their statutory income. Approved high technology companies in priority sectors have a full tax exemption for as long as 10 years. The government provides allowances for re-investments and many other infrastructure and related benefits tied to specific investment zones.
• Singapore: $19 billion—Minister of State for trade and industry Low Yen Ling told the Singapore Semiconductor Industry Association in July the government will invest over a five-year period in emerging semiconductor technology and R&D, in accordance with its Electronics Industry Transformation Map. In addition, Singapore is trying to entice TSMC to scrap plans to build a 12-inch wafer fab in Europe in favor of a Singaporean location, DigiTimes Asia
• South Korea: Unspecified amount—The Act on Restriction of Special Taxation focuses on tax breaks for industries that make improvements to their facilities, including semiconductor companies. Nicknamed the K-Chips Act, the legislation offers a 15% tax credit to conglomerates. Small and medium-size businesses qualify for a 25% tax credit.

• United Kingdom: $1.5 billion—The National Semiconductor Strategy is to improve access to infrastructure, power more R&D and facilitate international cooperation.
• United States: $52.7 billion—The Chips and Science Act is for semiconductor R&D and manufacturing, workforce development, and to achieve tech dominance over China. The total business investment so far exceeds $200 billion, according to management consulting firm McKinsey.