The US Is Investing $5B in Chip R&D—Here’s What You Need to Know

President Joe Biden’s administration is investing more than $5 billion into semiconductor-related development to strengthen America’s chip industry as demand for artificial intelligence (AI) tech hardware booms.1

The administration said Friday the money will go toward the research and development (R&D) of semiconductors as well as developing workforce in the industry.1 The announcement is the latest phase of the CHIPS and Science Act of 2022, which created the largest publicly funded R&D program in American history to support chip manufacturing in the U.S. and reduce reliance on other countries.

“These investments advance U.S. leadership in semiconductor R&D, cut down on the time and cost of commercializing new technologies, bolster U.S. national security, and connect and support workers in securing good semiconductor jobs,” the White House said.

The White House announced its first grant under the CHIPS and Science Act in December. Defense contractor BAE Systems (BAESY) received $35 million to modernize an aging factory in Nashua, New Hampshire. The move sent shares of chipmakers like Intel (INTC) and Advanced Micro Devices (AMD) higher at the time.

Last month, the Commerce Department also said it would grant Microchip Technology (MCHP) $162 million in federal funding from the CHIPS Act to boost chip production.

Semiconductor stocks including Intel, AMD, Nvidia, and Broadcom (AVGO) advanced Friday following the news. The PHLX Semiconductor Index has gained more than 50% over the past year.