US Opens $1.6 Billion Competition for Chip Packaging Research

A wafer sorter inside the GlobalFoundries semiconductor manufacturing facility in Malta, New York, US, on Tuesday, June 18, 2024. The Biden administration announced on Monday that the US and India will spend $90 million over the next five years to study the technology that powers AI and semiconductors, following a meeting between US National Security Adviser Jake Sullivan and his Indian counterpart, Ajit Doval. (Cindy Schultz/Bloomberg)

(Bloomberg) -- The Biden administration is launching a $1.6 billion funding competition for chip packaging research and development projects, marking the latest attempt to revitalize the domestic semiconductor industry. 

The funding — coming from the 2022 Chips and Science Act — will pay for research in five areas, said Commerce Undersecretary for Standards and Technology Laurie E. Locascio. In addition to backing research, officials expect to help finance prototype development. 

Packaging — the process of encasing chips to both protect them and connect them to devices — is an essential part of the industry. The US accounts for just 3% of the world’s capacity, with the lion’s share of packaging done in Asia. But several companies — Intel Corp., SK Hynix Inc., Amkor Technology Inc. and Samsung Electronics Co. — are building packaging plants in the US. 

The announcement represents by far the largest funding opportunity to come out of an $11 billion Chips Act R&D fund. The legislation also set aside $39 billion in grants — plus $75 billion in loans and loan guarantees, and 25% tax credits — to bring semiconductor manufacturing back to American soil after years of production shifting to Asia.  

The five categories covered by the new program — equipment and tools, power delivery and heat management, connector technology, electronic design automation, and so-called chiplets — will get multiple awards of up to $150 million each. Chiplets are modular pieces of electronics designed for a specific function.

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