Inside Commerce’s multibillion dollar plan to build a domestic chip packaging industry
The Scoop
The Biden administration is about to kick off another key stage of its push to build up the U.S. semiconductor industry.
Early next year, the Commerce Department plans to begin fielding funding applications for research and development in advanced packaging, the process that stitches multiple chips together to make devices faster, cheaper, and more complex (think semiconductors used in the most advanced smartphones, biotechnology, or artificial intelligence).
The department’s vision for the National Advanced Packaging Manufacturing Program, shared exclusively with Semafor before its release, is the next big step the Biden administration is taking to implement the CHIPS and Science Act. The law provides $3 billion for research and development in advanced packaging.
“We’ve envisioned that, by the end of the decade, the United States would be home to multiple high-volume advanced packaging facilities and will be a global leader in commercial-scale advanced packaging for the most sophisticated chips made in the world,” Under Secretary of Commerce Laurie Locascio told Semafor in an interview.
Packaging advanced chips in the U.S., she said, will both secure U.S. supply chains and remove any security risks associated with sending chips overseas to be completed. Currently, most advanced packaging is concentrated in Asia, where Taiwan has dominated semiconductor production. China has also been investing in advanced packaging techniques. By one estimate highlighted by Commerce, North America accounted for only 3% of global advanced packaging production as of 2021.
“We have a lot of work to do in order to catch up in general with the Asian markets,” said Locascio, who is scheduled to deliver a speech at Morgan State University in Baltimore laying out the plan for the program on Monday. “Can we do it? Absolutely.”
The Commerce Department vision paper lays out six areas where officials will focus the $3 billion, the first being materials and substrates, or the pieces that attach chips to circuit boards. The department plans to open the competition for grants in early 2024.
Locascio, who also leads the National Institute of Standards and Technology, said the funding will be open to research institutions like universities or national labs and that applicants would be able to form “teams” with industry. “We need researchers to be thinking about the path to manufacturing,” she said.
Morgan’s view
Chances are that you haven’t heard much about the advanced packaging piece of the CHIPS Act, which has received far less attention to date than the $39 billion pot available to companies for manufacturing in the U.S.
But it’s an important piece of the Biden administration’s ambitions to bring more semiconductor manufacturing back stateside, since packaging is a critical part of the supply chain. The Commerce Department’s vision paper for the program puts it bluntly: “Investments in semiconductors will not succeed without investments in advanced packaging.”
It’s also an important part of the administration’s efforts to compete with China over emerging technologies, including AI.
“We all know how important AI chips are today and how important they are in terms of global competitiveness, particularly with China,” Locascio said. “We are ahead; we want to stay ahead. We design the most advanced chips in the world. We just need to make them here and package them here.”
Like other parts of the CHIPS law, it will take years for the U.S. to start to see the advanced packaging funding kick in. Commerce plans to follow the first round of applications with requests focused on research in equipment, tools, and processes; power delivery and thermal management; photonics and connectors; chiplets; and co-design.
The View From Taiwan
Taiwanese chipmaker TSMC leads the globe with the highest number of advanced packaging patents, according to data reported by Reuters earlier this year. TSMC is among the companies vying for incentives for semiconductor production under the CHIPS law, despite concerns about some of the requirements. Arizona’s Democratic Gov. Katie Hobbs said on a trip to Taiwan in September that Arizona officials were in talks with the Taiwanese chipmaker about adding advanced packaging capabilities to its facilities in the state, which are currently under construction.
