The Commerce Department is ready to start disbursing some $39 billion in subsidies and incentives for companies building new semiconductor manufacturing plants in the U.S., part of the massive $280 billion CHIPS Act signed into law last summer.

But for those accepting the funding, which aims to bolster a domestic chip manufacturing capacity that’s waned dramatically in the past few decades, the money comes with a list of requirements, including profit sharing mandates and adequate and affordable child care for those building, and working in, the new high-tech facilities.

The CHIPS (Creating Helpful Incentives to Produce Semiconductors) plus Science Act earned bipartisan support in Congress last year, ending a journey that Senate Majority Leader Chuck Schumer, D-N.Y., said began some three years before in collaboration with his Republican colleague, Indiana Sen. Todd Young.

In August, President Joe Biden signed the legislation into law, calling it a “once in a generation investment” that “supercharges our efforts to make semiconductors here in America” as the microchip industry that was dominated by U.S.-based research and innovation has since mostly migrated to Taiwan, South Korea and China.

“We face an inflection point in our nation and around the world,” Biden said. “Fundamental change is taking place today, politically, economically and technologically. Change that can either strengthen our sense of control and security … or change that weakens us.

“This is the moment we face.”

The legislation provides more than $52 billion in grants and other incentives for the semiconductor industry as well as a 25% tax credit for those companies that invest in chip plants in the U.S. It also calls for increased spending on various research programs that would total about $200 billion over 10 years, according to the Congressional Budget Office.

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On Tuesday, the Commerce Department announced it was ready to begin accepting applications for $39 billion in funding earmarked to incentivize the building of new U.S. microchip manufacturing facilities, known widely as “fab” plants. The money will be disbursed variably as direct funding, federal loans or federally guaranteed loans from third-party financiers.

But the companies that accept $150 million or more in direct funding are required to “provide a plan for access to child care for facility and construction workers, e.g., through on- or near-site child care, pre-arranged agreements with existing child care providers, child care subsidies, or other similar measures.”

The Commerce Department provided additional details about the child care expectations for grant recipients, a requirement it called “critical to expanding employment opportunity for economically disadvantaged individuals, including economically disadvantaged women:”

• Affordable — costs are within reach for low- and medium-income households.

• Accessible — at a convenient location with hours that meet workers’ needs.

• Reliable — granting workers confidence that they will not need to miss work for unexpected child care issues.

• High-quality — providing a safe and healthy environment that families can trust and that nurtures the healthy growth and development of children.

Recipients who receive more than $150 million in direct funding will also be required “to share with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections by an agreed upon threshold,” the department said, per Reuters.

Commerce expects “upside sharing will only be material in instances where the project significantly exceeds its projected cash flows or returns, and will not exceed 75% of the recipient’s direct funding award.”

An additional requirement stipulates that companies that accept CHIPS funding cannot make new semiconductor investments in “countries of concern” for a period of 10 years.

Currently, Asian nations control more than 80% of global microchip market share. But parsed by country of origin, Taiwan is the undisputed world leader when it comes to chips, accounting for some 63% of the total market, with South Korea at 18% and China about 6%. While U.S.-based manufacturers had 37% of the microchip market in 1990, it’s now down to 12%. And, when it comes to the most advanced microchips, Taiwan controls some 90% of the global market.

At a China-focused summit hosted by World Trade Center Utah and Utah Valley University in June, experts noted the country has made no secret about its commitment to building up its own microchip infrastructure and is investing billions of dollars in incentives and giveaways to rapidly grow its slice of the global market.

During a summit discussion, Sarah Kemp, vice president for international government affairs at Intel, noted domestic microchip manufacturing capacity has evolved into a significant geopolitical issue.

“At this particular moment in time, economic security is national security and, around the world, people have realized that means chips,” Kemp said. “This tiny little thing the size of a postage stamp and as thin as one strand of hair, that has over 30 billion components to it, drives everything you do.”

While the Asian microchip powerhouses have built their market positions with significant government-backed support, Kemp noted a new wave of nations is looking to emulate that success. Now, a growing number of national governments are engaging programs to support their own expansions in chip manufacturing capacity.

“What steel and railroads were in the 1900s, chips … are right now,” Kemp said. “It’s the next big leap in economic vitality. And every country in the world wants to get in on that game.”

Utah has its own chips in the game when it comes to semiconductor fab plants.

Just weeks after finishing up a multibillion-dollar renovation of a former Micron chip fabrication facility in Lehi, electronics giant Texas Instruments announced plans last month to make an additional $11 billion investment in a new chip fab near the current operation.

Texas Instruments designs and makes semiconductors that are then sold to electronics designers and manufacturers all over the world. Headquartered in Dallas, the company has design, manufacturing and sales operations in more than 30 countries with around 33,000 employees worldwide.  

Construction of the new facility is expected to begin in the second half of 2023, with production expected as early as 2026, according to Texas Instruments.