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What is the US CHIPS and Science Act?

In August 2022, the United States enacted the CHIPS and Science Act of 2022 (the Chip Act), which will support semiconductor manufacturing.

The CHIPS Act provides incentives to U.S. semiconductor chip manufacturers, including providing a 25% manufacturing investment credit for investments in semiconductor manufacturing properties placed in service after December 31, 2022, for which construction begins before January 1, 2027.

Property investments are eligible for the 25% credit if, among other requirements, the property is part of the operation of an advanced manufacturing facility, defined as one that has as its primary purpose the manufacture of semiconductors or semiconductor manufacturing equipment.

Currently, companies such as Alpha and Omega Semiconductor are evaluating the impact of the CHIPS and Science Act.

Semiconductors are electronic devices that perform a variety of functions, such as signal conversion or control, data processing, and power supply or management.

With advances in semiconductor technology, the functionality and performance of semiconductors have generally increased over time, while size and cost have generally decreased.

CHIPS and Science Act

These advances have led to the proliferation of more complex semiconductors that are used in a wide variety of consumer, computing, communications and industrial markets and have contributed to the growth of the semiconductor industry.

This has been accelerated by increased regulations governing energy efficiency in many end-use applications.

For its part, Intel continues to work with governments in the United States and Europe to advance incentives for domestic manufacturing capacity for leading-edge semiconductors.

Considerable progress has been made in recent months, as President Joe Biden signed the CHIPS and Science Act, which includes funding for $52 billion in incentives for the U.S. semiconductor industry; the U.S. Congress is moving forward with the FABS Act, which will establish a U.S. semiconductor investment tax credit; and the European Chips Act has added €15 billion to the existing €30 billion in public investment to build new infrastructure, among other developments.

Intel‘s agreement with Brookfield follows a memorandum of understanding the two companies announced in February 2022.

Under the terms of the agreement, the companies will jointly invest up to $30 billion in Intel’s previously announced manufacturing expansion at its Ocotillo campus in Chandler, Arizona, with Intel funding 51% and Brookfield 49% of the total project cost.

 

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