Texas Instruments (TI) (NASDAQ: TXN) and the U.S. Department of Commerce have signed a non-binding Preliminary Memorandum of Terms for up to $1.6 billion in proposed direct funding under the CHIPS and Science Act to support three semiconductor wafer fabrication facilities already under construction in Texas and Utah. In addition, TI expects to receive an estimated $6 billion to $8 billion from the U.S. Department of Treasury’s Investment Tax Credit for qualified U.S. manufacturing investments.
A Texas Instruments fabrication facility under construction in Sherman, Texas.
The proposed direct funding, coupled with the investment tax credit, would help TI provide a geopolitically dependable supply of essential analog and embedded processing semiconductors. Shortages of common semiconductors used in vehicle systems led to parts shortages and reduced vehicle production during the pandemic.
TI makes a variety of products used in the automotive industry for advanced driver assistance systems (ADAS), body electronics & lighting, hybrid, electric & powertrain systems, infotainment & cluster and software-defined vehicles.
“The historic CHIPS Act is enabling more semiconductor manufacturing capacity in the U.S., making the semiconductor ecosystem stronger and more resilient,” said Haviv Ilan, president and CEO of Texas Instruments. “Our investments further strengthen our competitive advantage in manufacturing and technology as we expand our 300mm manufacturing operations in the U.S. With plans to grow our internal manufacturing to more than 95% by 2030, we’re building geopolitically dependable, 300mm capacity at scale to provide the analog and embedded processing chips our customers will need for years to come.”
The proposed direct funding under the CHIPS Act would support TI’s investment of more than $18 billion through 2029, which is part of the company’s broader investment in manufacturing. This proposed direct funding will support three new wafer fabs, two in Sherman, Texas, (SM1 and SM2) and one in Lehi, Utah (LFAB2), specifically to:
These connected, multi-fab sites benefit from shared infrastructure, talent and technology sharing, and a strong network of suppliers and community partners. They will produce semiconductors in 28nm to 130nm technology nodes, which provide the optimal cost, performance, power, precision and voltage levels required for TI’s broad portfolio of analog and embedded processing products.
“With this proposed investment from the Biden-Harris Administration in TI, a global leader of production for current-generation and mature-node chips, we would help secure the supply chain for these foundational semiconductors that are used in every sector of the U.S. economy, and create tens of thousands of jobs in Texas and Utah,” said U.S. Secretary of Commerce Gina Raimondo. “The CHIPS for America program will supercharge American technology and innovation and make our country more secure – and TI is expected to be an important part of the success of the Biden-Harris Administration’s work to revitalize semiconductor manufacturing and development in the U.S.”
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