The US Is Investing $5B in Chip R&D—Here’s What You Need to Know

Key takeaways

  • The White House on Friday announced a $5 billion investment in semiconductor-focused research, development and workforce needs through the CHIPS and Science Act.
  • This announcement is the final phase of the CHIPS and Science Act of 2022, intended to support U.S. chip manufacturing and strengthen its competitiveness.
  • The move comes as demand for chips to power artificial intelligence (AI) systems is booming.

President Joe Biden's administration is investing more than $5 billion in semiconductor-related development to bolster the U.S. chip industry as demand for artificial intelligence (AI) technology hardware explodes.

The administration said Friday the money would go toward semiconductor research and development (R&D) as well as workforce development in the industry. This announcement is the final phase of the CHIPS and Science Act of 2022, which created the largest publicly funded R&D program in American history to support U.S. chip manufacturing and reduce reliance on with regard to other countries.

“These investments strengthen U.S. leadership in semiconductor R&D, reduce the time and cost to bring new technologies to market, strengthen U.S. national security, and connect and help workers get good jobs in the sector semiconductors,” the White House said.

The White House announced its first CHIPS and Science Act grant in December. Defense contractor BAE Systems (BAESY) received $35 million to upgrade an aging factory in Nashua, New Hampshire. The move sent shares of chipmakers like Intel (INTC) and Advanced Micro Devices (AMD) soaring at the time.

Last month, the Commerce Department also announced it would provide Microchip Technology (MCHP) with $162 million in federal CHIPS Act funding to boost chip production.

Semiconductor stocks including Intel, AMD, Nvidia and Broadcom (AVGO) rose Friday following the news. The PHLX Semiconductor Index has gained more than 50% over the past year.

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