The demand is so high: the US has to reject most chip funding applications

The U.S. is currently waving the money bag around to attract companies to manufacture key technology in their country, including semiconductors (the U.S. Chips Act). But US officials apparently did not anticipate such high demand. Meanwhile, more than 600 applications for funding have already been received, most of which the government must reject because the target $28 billion in support is insufficient for the emergency.

U.S. Commerce Secretary Gina Raimondo also made clear in a speech on Monday that the plan's purpose “To distribute a bunch of money to as many companies as possible“. Rather, it will be about targeted investments that serve the country's national security goals. While the U.S. is leading the development of chips and AI language models, these technologies depend on manufacturing capacity overseas, he said.

While addressing this shortage is critical to the country, the urgency may mean that major chip manufacturers have to commit fewer resources than they originally intended. We want to focus more on projects that can be implemented by 2030 in order to proceed with rapid implementation without raising false hopes. Raimondo explains that it's simply irresponsible to financially support a project that won't work for a decade if it means rejecting other projects that could start this year.

The Commerce Department's decision to prioritize the 2030 schedule also suggests that most of the funding will go to Intel, TSMC, Samsung and other large foundry operators that have already broken ground on several new U.S. factories. Similar to the EU's targets, the US wants to produce 20% of its most advanced chips domestically by 2030.