August 20, 2024 /SemiMedia/ -- The Biden administration has announced that Texas Instruments (TI) will receive $1.6 billion in grants and $3 billion in loans under the CHIPS Act, a major incentive aimed at boosting U.S. semiconductor manufacturing. These funds will be used for the construction of TI's fabs in Utah and Texas, with total project costs expected to reach around $18 billion by 2029. This effort is expected to create approximately 2,000 manufacturing jobs and thousands of construction jobs.

TI plans to invest around $40 billion in these two states, including the construction of two additional fabs in Sherman, Texas. These facilities are likely to come online after 2030. The U.S. Department of Commerce has stated that projects expected to be completed by the end of this decade will be given priority. In addition to the grants and loans, TI is also expected to receive a 25% tax credit under the 2022 CHIPS and Science Act, which could amount to $6 billion to $8 billion.

The CHIPS Act is one of the most ambitious industrial policy efforts in the U.S. in decades. It aims to encourage companies to increase semiconductor production within the U.S. by providing $39 billion in direct subsidies and $75 billion in tax credits, loans, and loan guarantees. Much of the production has previously been outsourced to Asia. U.S. officials have already allocated most of the funds through several initial awards and expect to complete all allocations by the end of this year.

While a significant portion of the funds will support companies like Intel and TSMC in producing advanced chips, at least $2 billion has been set aside under the CHIPS Act for less advanced semiconductors, known as mature chips, which are produced by companies like TI. Another key incentive for mature chips includes a $1.5 billion grant to GlobalFoundries.

Mature chips are crucial to the global economy, powering everything from smartphones to refrigerators. China is also ramping up its efforts in this area, prompting vigilance from the U.S. and the EU. In May, President Biden announced plans to double tariffs on Chinese components to 50%. U.S. Deputy Secretary of Commerce Laurie E. Locascio stated that the award to TI will help ensure "the domestic supply security of foundational semiconductors, which are the cornerstone of virtually every aspect of modern life."