Commerce Dept. outlines plan to revitalize chip industry

Intel's new Sapphire rapids microprocessor at its headquarters in Santa Clara (California) on January 9. Note from the Editor: Your subscription to Finance & Commerce includes business content from The New York Times. WASHINGTON - The Biden Administration announced plans to accelerate research on microchips that are needed to power computers and cars, as well as other devices. It said it would create a national organization, with offices in different parts of the United States.

Commerce Department, the department in charge of revitalizing the U.S. Chip Industry, announced that its new National Semiconductor Technology Center will bring together universities, companies and other stakeholders to work on the next-generation chip technologies. The organization will include a number of research centers whose locations have not yet been chosen. It aims to be operational before the end of the year.

Gina Raimondo said that the organization will help to'regain America’s leadership in the research and development of technologies for the future and, importantly, ensure we remain there for decades'.

She added, "It is a place for industry, academia, startups, and investors to come together and solve the most important challenges, and set priorities."

These plans are part the Biden administration’s efforts to revitalize semiconductor manufacturing, and to ensure the United States is able to maintain a constant supply of chips to support its factories and national defense. Commerce Department is responsible for allocating $50 billion in order to revive the industry. This includes $11 billion dedicated to research and developments.

This effort will be centered around the technology center. Raimondo explained that some of the locations will be able to manufacture new chip designs from start-to-finish, while others will focus on testing new materials, equipment and ways of assembling chips in order to make them stronger.

Laurie Giandomenico is the vice president and chief accelerator officer at MITRE. A nonprofit organization that operates federally-funded research centers, she called the United States' $11 billion investment 'pretty important', given that in the past, the semiconductor industry spent around $70 billion worldwide on research and development.

She said that the challenge would be to make sure that money is spent on collaborative research that solves the biggest industry problems and not on the'siloed innovations' that are currently carried out by the chip companies that protect their creations against competitors.

She said that the focus should be on issues that no single company could solve.

Companies, local governments, legislators, and universities have lobbied the administration for an outpost to be set up in their region. Raimondo stressed that the organization will be an independent, 'trusted player' with board members selected by a separate committee and strict controls to protect intellectual property.

Raimondo stated that one of the primary goals for the organization would be to make it easier and cheaper for startups and new entrants in order to develop and commercialize chip technologies.

She said, "We would like to reduce by half the cost projected for moving a chip from conception to commercialization in the next decade."

Chris Miller, author of "Chip War," which documents the development of the industry, stated that it is relatively easy for researchers to come up with a new chip idea in the laboratory. Researchers can struggle to get their inventions produced due to the high costs of manufacturing chips.

Analysts estimate that designing an advanced chip with tens or hundreds of millions transistors can cost up to $100 million. The latest systems to define the smallest circuitry in wafers can cost up to $100 million, and the new factories that produce advanced chips cost between $10 billion and $20 billion.

Miller stated that 'the big fabs want to produce 100 million chips for the iPhone, and not 10 chips for a MIT professor'.

Venture capitalists often avoid investing in chip-based startups, as they require more funding and time to earn a return.

The government's Technology Center will create an investment fund for startups and manufacturing facilities to allow small companies to test new technologies.

I see a future where the U.S. could actually revitalize the microelectronics sector because we can bring down the cost of starting a chip by a factor between five and ten. Gilman Louie is a tech-investor and the chief executive officer of America's Frontier Fund, a nonprofit organization that invests in technology.

In the months to come, it is expected that the center's priorities will be refined. The Commerce Department has specified some areas of focus, such as improving the technology to analyze the microscopic parts of chips and setting up technical standards for new types of chip packaging.

Many companies have begun to break down large products into smaller "chiplets" that can be stacked or placed next to each other.

The Commerce Department stated that setting up new standards would pave a way for companies to create marketplaces where they can use chiplets from different vendors to create new products.

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