US Defence Department to bolster domestic chip manufacture with new programme

Major American semiconductor companies rely on Asian manufacturers to fabricate their chips. PHOTO: REUTERS

SAN FRANCISCO (REUTERS) - The US Defence Department will soon start soliciting proposals for a programme to provide incentives to boost semi-conductor manufacturing capabilities in the United States, according to a posting on a government contracting site.

Major American semiconductor companies such as Apple Inc , Qualcomm Inc and Nvidia Corp rely on outside manufacturers such as Taiwan Semiconductor Manufacturing Co Ltd (TSMC) or Samsung Electronics Co Ltd to fabricate their chips in what are called foundries.

Most of those foundries are located in Taiwan or South Korea. While Intel Corp operates US chip factories, they are mostly dedicated to manufacturing its own chips rather than doing work for outside clients.

The Defence Department is looking to change that dynamic by providing incentives for the development of chip-related intellectual property and the creation of advanced foundries in the United States, according to a notice posted to the website of the National Security Technology Accelerator, a non-profit group that works to connect private-sector companies to government contract opportunities.

The foundries would handle commercial work from US companies and could also provide components to the Defence Department, it said.

The Defence Department plans to announce a program called "Rapid Assured Microelectronics Prototypes - Commercial", or"Ramp-C" for short, that will complement existing programmes it recently launched to encourage US chip manufacturing.

"There is currently no commercially viable option that can provide a US located leading-edge foundry that can fabricate the assured leading-edge custom integrated circuits and Commercial off the Shelf (Cots) products required for critical DoD systems. The purpose of the Ramp-C programme is to incentivise such an option," the posting said.

In October, one of Intel's plants in Arizona won the second phase of a contract aimed at helping the US military develop advanced chips more quickly. TSMC, a major supplier to Apple, is also independently working to build a US$12 billion (S$15.9 billion) chip plant in Arizona, where Phoenix city officials last month authorised a development agreement related to the project.

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