The White House's announcement this week that it will allocate up to $6.4 billion in chip-making cash to Samsung (005930.KS) marks a step into the next phase of the Biden administration's effort to bring semiconductor manufacturing back to the United States.
The focus to date has been largely on pioneering logic semiconductors. The launch is now set to focus on other areas, including memory chips, which are another crucial component in powering artificial intelligence.
Billions could be distributed to companies focusing on this aspect of the sector in the coming weeks and months.
So far, the Biden team has allocated nearly $23 billion of the $39 billion allocated to manufacturers, with that money earmarked to help fund facilities from Arizona and New Mexico to Ohio and New York.
Other recent major awards alongside Samsung include US$6.6 billion in grants to Taiwan Semiconductor Manufacturing (TSM) and US$8.5 billion to Intel Corporation (INTC).
The money comes from the 20-month-old Chips and Science Act, which allows the White House to spend a total of about $50 billion to try to help revitalize U.S. chip manufacturing and research in the coming years.
Samsung's announcement this week will help fund Texas facilities in both Austin and Tyler. The state money will be part of a total investment of about $45 billion to build a cluster in the state.
The new facilities, which are scheduled to come online in phases between now and the end of the decade, will include two chip manufacturing facilities, a research center, as well as a packaging facility.
Samsung focuses on leading chips at this facility, including production using the nanometer process, the world's most advanced processing technology.
“These facilities will support the production of some of the world’s most powerful chips, which are essential for advanced technologies like artificial intelligence and will strengthen America’s national security,” President Biden added in a statement.
In addition to Samsung, TSMC and Intel, three smaller manufacturing awards were previously announced.
There was roughly $35 million to BAE Systems (BAESY), $162 million to Microchip Technology, and $1.5 billion to GlobalFoundries (GFS) largely to fund less advanced but still important chip manufacturing.
More is coming
Biden officials hope the remaining awards will help stimulate other aspects of the complex industry.
The highest remaining priority will likely be leading-edge memory chips, which — although they don't handle the high-level computational tasks reserved for logic chips — are still essential for artificial intelligence.
Micron (MU) — which describes itself as “the only memory manufacturer in the U.S.” — is still awaiting its award, for example. President Biden visited Micron's New York factory in 2022, and described the company's efforts there as “one of the most important investments in American history.”
Other awards could also focus on less advanced chip production that is important for a range of applications from national security to home appliances.
The semiconductor supply chain is also set to be a priority in the upcoming awards and perhaps even in the second wave in the coming years.
There will be an effort to support what It remains a global process Even as the Biden administration aims to achieve an ambitious goal of having 20% of the world's most advanced logic chips manufactured in the United States by the end of the decade.
Samsung's announcement on Monday included a focus on semiconductor packaging — making the metal, plastic, glass or ceramic container to hold the chips — with Commerce Secretary Gina Raimondo emphasizing that fact in her comments to reporters this week.
“It's not just the manufacturing of the chips, it's the packaging chips in the same location,” she said of Samsung's upcoming facilities in Texas. She notes that currently, “even chips made in the United States are still in many cases shipped to Taiwan for packaging, including chips used in defense systems.”
All told, according to the Biden administration, there have been more than $70 billion in pilot funding requests, far exceeding the $39 billion in the manufacturing program overall.
Ben Werchkul is Yahoo Finance's Washington correspondent.
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