Texas Instruments is set to become one of the major beneficiaries of the CHIPS and Science Act, securing up to $1.6 billion in funding. This initiative, led by the Biden administration, aims to revitalize the American semiconductor manufacturing sector, which has seen its global production share drop dramatically over the years.
The impetus for the CHIPS Act came as U.S. officials recognized the declining domestic semiconductor manufacturing capability, particularly during the COVID-19 pandemic. It was during these trying times when it became evident how vulnerable the supply chains had become, prompting the formulation of the Act.
Initially signed off back in August 2022, the CHIPS Act has allocated $52.7 billion to boost domestic chip production. Texas Instruments stands out as the latest recipient, reportedly planning to increase its 300mm wafer fabrication capabilities, which are critically important for supplies across various tech sectors.
The landmark agreement between Texas Instruments and the U.S. Department of Commerce outlines the intended uses for these funds. The funding will facilitate the establishment of new wafer fabrication facilities—specifically, three factories located across Texas and Utah.
Specifically, the construction plan includes two facilities situated in Sherman, Texas, along with one outlet based in Lehi, Utah. These plants have been earmarked for producing cutting-edge analog and embedded processing semiconductors, expected to significantly expand Texas Instruments' production capabilities.
Texas Instruments estimates the overall investment to build these facilities will be around $18 billion by 2029, significantly boosting local economies. The effort is also anticipated to generate approximately 2,000 manufacturing jobs and thousands more during the construction phase, heralding substantial economic growth.
On top of the direct funding support, Texas Instruments expects to benefit substantially from the Investment Tax Credit. This could net them between $6 billion to $8 billion, consolidifying their financial position as they ramp up production.
Texas Instruments is not just one of the largest semiconductor manufacturers, but they also boast the most extensive customer base in the industry. This funding marks yet another chapter of the company's commitment to bolstering its U.S.-based manufacturing operations.
The current wave of investments aligns perfectly with national ambitions to revitalize the semiconductor industry. Over the past three decades, the U.S. share of global semiconductor production has diminished from 37% to around 12%, and these efforts aim to reverse the trend.
The serious chip shortages during the pandemic severely impacted numerous sectors, especially automotive and defense, which rely heavily on semiconductors. With automobiles requiring chips for everything from engine management to infotainment systems, the supply chain disruption had widespread repercussions, including production halts and job furloughs.
Such disruptions had real economic impacts; estimates suggest the automotive industry downturn due to chip shortages knocked about one percentage point off the U.S GDP back in 2021. Consequently, investing locally not only assures suppliers of the materials they need but also stabilizes job markets and bolsters the economy.
Texas Instruments’ commitment to building additional facilities taps directly back to these recent supply challenges. The intended growth aims to create more resilient supply chains for semiconductors, safeguarding against future interruptions and ensuring consistent production.
While many investments from the CHIPS Act are directed at cutting-edge semiconductor manufacturing, there's significant room and necessity for the production of legacy chips. These older generation chips remain indispensable across numerous applications—a fact not lost on Washington, which has recognized their importance and prescribed funding allocations.
The funding awarded to Texas Instruments marks only the latest step as more preliminary awards from the CHIPS Act are rolled out. The announcement signifies broader concerns about ensuring continuous and secure domestic production of semiconductor technology, especially as geopolitical tensions rise.
Indeed, concerns about China’s semiconductor ambitions are growing. The U.S. has been prompted to respond more assertively, emphasizing the need for nations to secure their chip supply chains.
Overall, Texas Instruments' plans to invest significantly domestically could have cascading benefits for the American economy and technological community. Ensuring U.S. independence from foreign manufacturing will be key as the country moves forward, particularly to maintain resilience across all industries reliant on semiconductor technology.
With this newfound funding, Texas Instruments stands at the forefront of reshaping American semiconductor manufacturing. Their drive for expansion not only ensures their competitive edge but supports the technological backbone of numerous industries across the nation.
