US officials face tough choices for subsidizing AI chip manufacturing

investing.com:

By Stephen Nellis and Max A. Cherney

SAN FRANCISCO (Reuters) — U.S. officials have earmarked close to $30 billion in subsidies for advanced semiconductor manufacturing, aiming to bring cutting-edge artificial-intelligence chip development and manufacturing to American soil.

But with money set to start flowing in the next few weeks, accomplishing that goal is far from certain, industry experts say. The Biden administration must weigh how much taxpayer money to allocate among Taiwan Semiconductor Manufacturing, a powerful foreign leader, and Intel, a beleaguered homegrown company whose turnaround efforts remain promising but untested.

Betting on AI chips is also challenging in the rapidly evolving industry. Handing out subsidies today to the likes of Intel (NASDAQ:INTC), TSMC or Samsung Electronics (KS:005930), which is also vying for federal dollars and is the only other firm in the world that can make advanced chips, does not guarantee security in the AI landscape of the future.

«AI itself is moving so quickly, if you focus on today's AI chips, maybe two years from now it's a whole different thing,» said Jay Goldberg, chief executive of D2D Advisory, a finance and strategy consulting firm. «As opposed to the (general) road map of advanced chipmaking which we know pretty clearly for the next decade.»

The money will come from the U.S. CHIPS Act, which passed in 2022. Intel, TSMC and Samsung are all building factories in the U.S. and are all likely to receive some degree of U.S. subsidies. The main question is how U.S. officials allocate the money to meet the goal of bolstering AI chip production.

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