The Commerce Department on Tuesday unveiled its $50 billion distribution plan. They will be aimed at developing the semiconductor industry and countering China, the Biden administration said. This is expected to be the largest US government effort to shape a strategic industry in decades.

Distribution of funds
About $28 billion is expected to go towards grants and loans. This will help build facilities to manufacture, assemble and package some of the world’s most advanced chips. Another $10 billion will be directed towards expanding the production of older generations of technology used in automobiles and communications technology, as well as specialized technologies and other industry suppliers. $11 billion will go towards research and development initiatives related to the industry. The ministry plans to begin accepting applications from companies for funding no later than February. Disbursements could begin by next spring, Gina Raimondo, secretary of commerce, said in an interview. The fund, approved by Congress in July, was created to boost U.S. production of strategically important semiconductors and spur research and development for the next generation of chip technology. The Biden administration argues that the investment will reduce reliance on overseas supply chains. It has become a serious threat to the country’s national security. “This is a once in a lifetime opportunity. A once-in-a-generation opportunity to ensure our national security and revive American manufacturing. A resurgence of American innovation, research and development,” said Gina Raimondo. “So while we’re working on an urgent basis, we need to get it right, and that’s why we’re strategizing now.” Trade experts call the fund the most significant investment in US industrial policy in the past 50 years. It will come at a tipping point for the semiconductor industry.

The Biden administration has taken steps
Tensions between the United States and China are rising over Taiwan, which is the source of more than two-thirds of the most advanced semiconductors. The shortage of semiconductors is also driving up inflation around the world. It increases delivery times and prices for electronics, home appliances and cars. Semiconductors are critical components of mobile phones, pacemakers, and coffee makers, and the key to cutting-edge technologies such as quantum computing, artificial intelligence, and drones. With the midterm elections approaching, the Biden administration must demonstrate that it can use these funds wisely and raise investment in manufacturing back to the US. The Department of Commerce is responsible for selecting the companies that receive the money and overseeing their investments. In its document, the Department of Commerce said the United States remains the world leader in chip development. However, they have lost their edge in producing the most advanced semiconductors in the world. In the past few years, a significant part of new production has been in China, the document says.