The Biden Administration has announced that the CHIPS and Science Act will subsidize US$400 million to help Amkor, the largest semiconductor packaging and testing company in the US, build a new US$2 billion semiconductor packaging plant in Peoria, Arizona.
This move highlights that the Biden Administration is focusing on semiconductor manufacturing investments in the US and ensuring that the essential back-end packaging processes can take root and develop in the country due to its geopolitical significance.
According to reports from FierceElectronics and Benzinga, before the passage of the US$52 billion CHIPS Act by the federal government in 2022, executives in the chip packaging and testing sector expressed concerns that most of the subsidies might go to chip manufacturers like Intel and Micron, neglecting that the entire production cycle, including upstream, midstream, and downstream processes, need attention.
Even if the US can produce advanced process chips domestically, most packaging and testing operations still need to be shipped and done overseas. This contradicts the Biden Administration's efforts to secure the US domestic chip supply chain and reduce potential national security risks.
Amkor receiving the domestic investment subsidy indicates that the White House has heard the packaging and testing industry's concerns. In addition to assisting wafer manufacturing, the US can become more self-sufficient in the entire chip production cycle.
Notably, Amkor's new factory, supported by this subsidy, will be located in Arizona, where TSMC is building the US's first advanced process wafer fab, and is also a significant domestic wafer manufacturing site for Intel. Amkor has acquired approximately 222,600 square meters of land and plans to establish a large-scale cleanroom facility, with the initial production phase expected to begin within three years.
This aligns with US Secretary of Commerce Gina Raimondo's statement that one of the CHIPS Act's objectives is to ensure chip production is entirely domestic. She emphasized that this investment is crucial for meeting the growing demand for AI chips and ensuring economic and national security.
At the same time, this project will also create new job opportunities in the US, aligning with the Biden Administration's current policy goals of attracting domestic manufacturing investment to create jobs. For instance, Amkor CEO Giel Rutten noted that this project will generate 2,000 job openings.
The new plant is expected to package chips based on 2.5D technology, a fundamental technology for AI and GPU chip development. The lack of 2.5D technology has been a "major bottleneck" in the chip industry's ability to meet the evergrowing demand for new-generation AI products and services.
The Semiconductor Industry Association (SIA) tracks the CHIPS Act's allocation of US$30.4 billion to 14 companies across 14 states for 24 projects. Companies like Intel, TSMC, Samsung Electronics, Micron, and GlobalFoundries have all received subsidies. The US Department of Commerce recently announced an additional US$1.6 billion investment to promote domestic advanced packaging technology R&D competition.
