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    U.S. Solar Makers Criticize Biden’s Tax Credits as Too Lax on China

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    U.S.-based manufacturers of solar products say rules issued by the Biden administration on Friday will “cement China’s dominance” over the solar industryBiden administration rules released on Friday that will determine which companies and manufacturers can benefit from new solar industry tax credits are being criticized by U.S.-based makers of solar products, who say the guidelines do not go far enough to try to lure manufacturing back from China.The rules stem from President Biden’s sweeping clean energy bill, which offers a mix of tax credits and other incentives to try and spur the construction of more solar factories in the United States and reduce the country’s reliance on China for clean energy goods needed to mitigate climate change.The Treasury Department, in guidance issued on Friday, said it would offer a 10 percent additional tax credit for facilities assembling solar panels in the United States, even if they import the silicon wafers used to make those panels from foreign countries. Under the Biden administration’s new climate legislation, solar and wind farms can apply for a 30 percent tax credit on the costs of their facilities.Senior administration officials told reporters on Thursday that they were trying to take a balanced approach, one that leaned toward forcing supply chains to return to the United States. But China’s dominance of the global solar industry has created a tricky calculus for the Biden administration, which wants to promote U.S. manufacturing of solar products but also ensure a plentiful supply of low-cost solar panels to reduce carbon emissions.The officials said that the Biden administration would have the leeway to change the rules when American supply chains become stronger.“The domestic content bonus under the Inflation Reduction Act will boost American manufacturing, including in iron and steel, so America’s workers and companies continue to benefit from President Biden’s Investing in America agenda,” Treasury Secretary Janet L. Yellen said in a statement. “These tax credits are key to driving investment and ensuring all Americans share in the growth of the clean energy economy.”Critics said the new rules would not go far enough to give companies incentives to move the solar supply chain out of China.Mike Carr, the executive director of the Solar Energy Manufacturers for America Coalition, which includes solar companies with U.S. operations like Hemlock Semiconductor, Wacker Chemie, Qcells and First Solar, called the move “a missed opportunity to build a domestic solar manufacturing supply chain.”“The simple fact is today’s announcement will likely result in the scaling back of planned investments in the critical areas of solar wafer, ingot, and polysilicon production,” he said in a statement. “China is producing 97 percent of the world’s solar wafers — giving them substantial control over both polysilicon and cell production. We fear that this guidance will cement their dominance over these critical pieces of the solar supply chain.”A four-acre solar rooftop in Los Angeles. The Biden administration wants 100 percent of the nation’s electricity to come from carbon-free energy sources by 2035.Mario Tama/Getty ImagesThe Biden administration has set an ambitious goal of generating 100 percent of the nation’s electricity from carbon-free energy sources by 2035, a goal that may require more than doubling the annual pace of solar installations.The United States still relies heavily on Chinese manufacturers for low-cost solar modules, although many Chinese-owned factories now make these goods in Vietnam, Malaysia and Thailand.China also supplies many of the key components in solar panels, including more than 80 percent of the world’s polysilicon, which most solar panels use to absorb energy from sunlight. And a significant portion of Chinese polysilicon comes from the Xinjiang region, where the U.S. government has banned imports because of concerns over forced labor.Other companies in the solar supply chain, which rely on imported components, were more positive about the Treasury Department’s guidance.Abigail Ross Hopper, the chief executive of the Solar Energy Industries Association, said the guidance was an important step forward that would “spark a flood of investment in American-made clean energy equipment and components.”“The U.S. solar and storage industry strongly supports onshoring a domestic clean energy supply chain, and today’s guidance will supplement the manufacturing renaissance that began when the historic Inflation Reduction Act passed last summer,” she said.Congressional Republicans have already targeted the Biden administration’s climate legislation, saying that it fails to set tough guidelines against manufacturing in China and that it may funnel federal dollars to Chinese-owned companies that have set up in the United States.The Biden administration is also dispensing funding to build up the semiconductor and electric vehicle battery industries. Guidelines for that money include limits on access to so-called foreign entities of concern, like Chinese-owned companies. But the Inflation Reduction Act does not contain guardrails against federal dollars going to the U.S. operations of Chinese solar companies.In a congressional hearing on April 25, Representative Jason Smith, chairman of the House Ways and Means Committee, pointed to the Florida facilities of JinkoSolar, a Chinese-owned manufacturer, as being eligible for federal tax credits.“Work at the plant involves robots placing strings of solar cells — which are largely sourced from China — onto a solar panel base,” a fact sheet released by Mr. Smith said.Mr. Biden has also clashed with domestic solar manufacturers over a separate trade case that would see tariffs imposed on solar products imported from Chinese companies based in Southeast Asia.Mr. Biden’s decision to waive the tariffs for two years angered Republicans and some Democrats in Congress, who said U.S.-based manufacturers deserved more protection. In recent weeks, the House and Senate approved a measure to reverse the president’s decision, which Mr. Biden is expected to veto. More

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    Biden’s $6.8 Trillion Budget Proposes New Social Programs and Higher Taxes

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    WASHINGTON — President Biden on Thursday proposed a $6.8 trillion budget that sought to increase spending on the military and a wide range of new social programs while also reducing future budget deficits, defying Republican calls to scale back government and reasserting his economic vision before an expected re-election campaign.The budget contains some $5 trillion in proposed tax increases on high earners and corporations over a decade, much of which would offset new spending programs aimed at the middle class and the poor. It seeks to reduce budget deficits by nearly $3 trillion over that time, compared with the country’s current path.It reaffirms Mr. Biden’s case that he can prevent the growing debt burden from weighing on the economy while expanding spending and protecting popular safety-net programs — almost entirely by asking companies and the wealthy to pay more in taxes.But after claiming credit for a $1.7 trillion decline in the annual deficit over the past year, Mr. Biden now sees the deficit increasing again in the 2024 fiscal year, to $1.8 trillion. The jump is larger than other forecasters, like the Congressional Budget Office, have projected. It is driven by rising costs of servicing the national debt as the Federal Reserve raises interest rates to curb inflation and by new programs the president is proposing that are not fully offset by tax increases in their first year.The plan drew swift criticism from Republicans, who are locked in an economically perilous debate with Mr. Biden over the borrowing limit, which House conservatives refuse to raise unless he agrees to sharp spending cuts.Senator Charles E. Grassley of Iowa, the top Republican on the Budget Committee, said Mr. Biden’s spending blueprint was “an unserious proposal and will be treated as such by both parties in Congress.”The budget plan, he said, “is a road map for fiscal ruin.”The proposals stand little chance of becoming law because Republicans won control of the House in November. Instead, Mr. Biden’s budget request was a political statement of values aimed at winning public opinion amid the debt-limit fight and a nascent 2024 campaign.He unveiled the plan formally on Thursday in Philadelphia. His budget would “lift the burden off families in America,” the president said during a swing-state speech meant to contrast his economic vision with that of Republicans who have called for spending cuts.“My budget is about investing in America and all of America,” Mr. Biden said during a roughly 50-minute speech to scores of union workers, Biden supporters and local Pennsylvania politicians. “Too many people have been left behind and treated like they’re invisible. Not anymore. I promise I see you.”The president emphasized a message of bolstering manufacturing, an effort many of his allies believe can sway blue-collar workers who in recent years have lost faith in the Democratic Party.The proposals in the budget showcased Mr. Biden’s early success in expanding the federal government’s role in the economy, and they reaffirmed his push for more. On Mr. Biden’s watch, its numbers show, domestic spending in areas like research and support for manufacturing has grown significantly larger as a share of the economy than was considered in the budget plans of the last Democratic administration, under President Barack Obama, when Mr. Biden was vice president.An Intel semiconductor manufacturing facility in New Albany, Ohio, is part of Mr. Biden’s plan to rebuild American manufacturing.Pete Marovich for The New York TimesIn his first two years as president, Mr. Biden signed laws to expand and rebuild critical infrastructure like water pipes and highways, bolster U.S. manufacturing of semiconductors and other high-tech goods, and accelerate a transition from fossil fuels toward low-emission sources of energy to fight climate change. He delivered military aid to Ukraine in its fight against Russia and signed a bipartisan law to increase federal medical care for military veterans exposed to toxic burn pits.He also left much of his economic agenda unfinished, a fact reflected in his budget, which renewed calls for programs that failed to pass muster when his party controlled Congress..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.“This president clearly believes the way to grow this economy is investing in the middle class and working families,” Shalanda D. Young, the director of the White House budget office, told reporters on Thursday.The president’s budget proposed $400 billion to deliver affordable child care for parents, $150 billion for home care for older Americans and disabled people, and nearly $400 billion to make permanent expanded health coverage assistance through the Affordable Care Act. He would spend $325 billion to guarantee paid leave for workers and nearly $300 billion combined for free community college and prekindergarten for students. He is seeking $100 billion in additional assistance to lower housing costs for homeowners and renters.Mr. Biden would reinstate for three years an expanded child tax credit, which was included in the economic aid bill he signed in 2021 but expired last year, as a means of reducing child poverty. He would make permanent a change in the credit that allows people to benefit from it in full even if they do not make enough money to owe federal income taxes. Together, the changes would cost more than $400 billion.To help offset costs, Mr. Biden proposed a series of tax increases on corporations and the wealthiest Americans. They include a 25 percent tax aimed at billionaires (he requested a similar tax last year but at a lower rate: 20 percent). He also called for quadrupling a tax on stock buybacks and renewed his push to roll back President Donald J. Trump’s tax cuts for high earners and to raise the corporate income tax rate to 28 percent from 21 percent.Mr. Biden proposed increasing and expanding a tax on Americans earning more than $400,000 as part of efforts to extend the solvency of Medicare by a quarter-century. He is also seeking new savings for the government based on more aggressive negotiation over prescription drug prices.But for the third consecutive budget, Mr. Biden did not put forth any new initiatives to extend the solvency of Social Security — unlike during the 2020 campaign, when he sought to expand benefits and bolster the program’s trust fund by effectively raising payroll taxes on people earning more than $400,000 a year.The budget offered few paths to compromise between Mr. Biden and Republicans on fiscal issues. One potential area of common ground was responding to what both parties call a growing military and economic threat from China. The budget proposed $9.1 billion in investments next year through the Pentagon’s “Pacific Deterrence Initiative,” which includes expenditures on new weapons systems that can be used to protect allies and defend U.S. interests in the region. It also asks for $400 million to a fund dedicated to countering the influence of the Chinese Communist Party abroad, such as exposing Chinese disinformation campaigns.The budget also refers to various domestic investments, which the administration argues are needed to make the U.S. economy more competitive with China. That includes money for domestic research into agriculture, an area where it says China has become the largest funder of research, as well as major investments in the manufacturing of semiconductors, clean energy products and other technologies in the United States.Still, Speaker Kevin McCarthy of California and his lieutenants reiterated on Thursday that they intended to insist on significant reductions in spending before they would consider allowing the federal debt limit to be raised — even though a stalemate over the debt limit could shake the world economy and endanger the retirement savings of millions of Americans.“We must cut wasteful government spending,” Mr. McCarthy and the other members of his leadership team said in a joint statement issued after Mr. Biden’s budget was released. “Our debt is one of the greatest threats to America, and the time to address this crisis is now.”The budget sees the gross national debt increasing by about $18 trillion through 2033, rising to just above $50 trillion. But the administration suggests that growth will not threaten the economy. “The economic burden of debt would remain low and in line with recent historical experience over the next decade,” administration officials wrote in the proposal.Last year’s budget painted a rosy and ultimately over-optimistic picture of the U.S. economy. The administration expected gross domestic product to grow 4.2 percent after adjusting for inflation, for instance, but it ultimately climbed by a more modest 2.1 percent.The new budget’s projections were more muted, with a caveat. The White House sees the economy growing by only 0.6 percent after adjusting for inflation this year, a weak pace that is in line with outside expectations. It also predicted a substantial increase in the unemployment rate — to 4.3 percent, a notable rise from 3.4 percent in January. Alongside that slowdown, inflation is expected to moderate.But officials noted that the administration completed its projections in November and that economic data had been stronger than expected since. Administration economists said in a blog post that unemployment “would likely be lower” than the official forecast in light of that.Much of the budget’s contents were holdovers from Mr. Biden’s previous proposals. But there were also a few new plans. One of them was a tax on the energy used in creating new digital currency assets, known as cryptocurrency mining. That practice relies on large amounts of electricity and generates emissions that contribute to climate change.Administration officials want to discourage the practice, which they say impedes the country’s energy transition. So they proposed a 30 percent tax on the electricity used in it, phased in over three years, whether that comes from an electric utility or a localized source like a home solar panel, on the theory that the energy involved would be put to better purpose in another use.Reporting was contributed by More

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    IRS Decision Not to Tax Certain Payments Carries Fiscal Cost

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    The Biden administration has opted not to tax state payments to residents, a decision that could add to the nation’s fiscal woes.WASHINGTON — More than 20 state governments, flush with cash from federal stimulus funds and a rebounding economy, shared their windfalls last year by sending residents one-time payments.This year, the Biden administration added a sweetener, telling tens of millions taxpayers they did not need to pay federal taxes on those payments.That decision by the Internal Revenue Service, while applauded by some tax experts and lawmakers, could cost the federal government as much $4 billion in revenue at a time when Washington is struggling with a ballooning federal deficit and entering a protracted fight over the nation’s debt limit.The I.R.S.’s ruling came after bipartisan pressure from lawmakers and was the latest move by the agency to forgo revenue this tax season.In December, the I.R.S. delayed by a year a new requirement that users of digital wallets like Venmo and Cash App report income on 1099-K forms if they had more than $600 of transactions. That requirement, which was part of the American Rescue Plan of 2021, was projected to raise nearly $1 billion in tax revenue per year over a decade. The last-minute decision to delay it followed intense lobbying from business groups and political backlash directed at the Biden administration, which was accused of breaking its pledge not to raise taxes on people making less than $400,000.Taken together, the moves by the I.R.S. run counter to two big economic issues bedeviling Washington — rapid inflation and concerns about the government’s ability to avoid defaulting on its debt.Allowing residents to avoid paying taxes on their state rebates means more money in their pockets to spend at a moment when the Federal Reserve is trying to rein in consumer and business spending to cool rising prices. A report released on Friday showed that, despite the Fed’s efforts to slow the economy, personal spending sped up in January.Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

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    Chip Makers Turn Cutthroat in Fight for Share of Federal Money

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    Semiconductor companies, which united to get the CHIPS Act approved, have set off a lobbying frenzy as they argue for more cash than their competitors.WASHINGTON — In early January, a New York public relations firm sent an email warning about what it characterized as a threat to the federal government’s program to revitalize the U.S. semiconductor industry.The message, received by The New York Times, accused Intel, the Silicon Valley chip titan, of angling to win subsidies under the CHIPS and Science Act for new factories in Ohio and Arizona that would sit empty. Intel had said in a recent earnings call that it would build out its facilities with the expensive machinery needed to make semiconductors when demand for its chips increased.The question, the email said, was whether officials would give funding to companies that outfitted their factories from the jump “or if they will give the majority of CHIPS funding to companies like Intel.”The firm declined to name its client. But it has done work in the past for Advanced Micro Devices, Intel’s longtime rival, which has raised similar concerns about whether federal funding should go to companies that plan to build empty shells. A spokesman for AMD said it had not reviewed the email or approved the public relations firm’s efforts to lobby for or against any specific company receiving funding.“We fully support the CHIPS and Science Act and the efforts of the Biden administration to boost domestic semiconductor research and manufacturing,” the spokesman said.Rival semiconductor suppliers and their customers pulled together last year as they lobbied Congress to help shore up U.S. chip manufacturing and reduce vulnerabilities in the crucial supply chain. The push led lawmakers to approve the CHIPS Act, including $52 billion in subsidies to companies and research institutions as well as $24 billion or more in tax credits — one of the biggest infusions into a single industry in decades.President Biden with Intel’s chief executive, Patrick Gelsinger, at an Intel semiconductor facility under construction in New Albany, Ohio, in September.Pete Marovich for The New York TimesBut that unity is beginning to crack. As the Biden administration prepares to begin handing out the money, chief executives, lobbyists and lawmakers have begun jostling to make their case for funding, in public and behind closed doors.In meetings with government officials and in a public filing, Intel has called into question how much taxpayer money should go to its competitors that have offshore headquarters, arguing that American innovations and other intellectual property could be funneled out of the country.“Our I.P. is here, and that’s not insignificant,” said Allen Thompson, Intel’s vice president of U.S. government relations. “We are the U.S. champion.”The Global Race for Computer ChipsA Ramp-Up in Spending: Amid a tech cold war with China, U.S. companies have pledged nearly $200 billion for chip manufacturing projects since early 2020. But the investments have limits.Crackdown on China: The United States has been aiming to prevent China from becoming an advanced power in chips, issuing sweeping restrictions on the country’s access to advanced technology.Arizona Factory: Internal doubts are mounting at Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of advanced chips, over its investment in a new factory in Phoenix.CHIPS Act: The sprawling $280 billion bill passed by U.S. lawmakers last year gives the federal government new sway over the chips industry.States, cities and universities have also gotten into the act, hoping to lure subsidies and jobs expected to be generated by manufacturing sites and new research and development.Purveyors of chips, their suppliers and the trade associations that represent them together spent $59 million on lobbying last year, according to tracking from OpenSecrets, up from $46 million in 2021 and $36 million in 2020, as they tried to ensure that Congress approved their funding.Some of those activities have now shifted to making sure companies snag the biggest portion.“Everybody wants their piece of the pie,” said Willy Shih, a management professor at Harvard Business School who follows semiconductor issues. He said it wasn’t surprising that companies would be raising tough questions about competitors, which could be helpful for the Commerce Department in setting policies.“We haven’t done something of this scale in the U.S. in a long time,” he said. “There is a lot at stake.”How the Biden administration distributes the funding in coming months could shape the future of an industry that is increasingly seen as a driver of both economic prosperity and national security. It may also influence how vulnerable the United States remains to foreign threats — particularly the possibility of a Chinese invasion of Taiwan, where more than 90 percent of the world’s advanced chips are made.Since American researchers invented the integrated circuit in the late 1950s, the U.S. manufacturing share has dwindled to around 12 percent. Most American chip companies, including AMD, focus on designing cutting-edge products while outsourcing the costly manufacturing to overseas foundries, most of which are in Asia.AMD’s chief executive, Lisa Su, at a technology trade show last month. AMD and Intel have been fierce competitors.David Becker/Getty ImagesTaiwan Semiconductor Manufacturing Company developed the foundry concept in the 1980s and dominates that market, followed by Samsung Electronics. Intel, which both designs and makes its own chips, fell behind TSMC and Samsung in manufacturing technology but has vowed to catch up and build its own foundry business to make chips for customers.The industry’s concentration has left it particularly vulnerable to supply chain disruptions. During the pandemic, shortages of lower-end “legacy” chips that are used in cars forced automakers to repeatedly close factories, sending prices soaring.The CHIPS Act aims to rectify some of these shortcomings by allocating $39 billion in grants for new or expanded U.S. factories. The Commerce Department has indicated that about two-thirds of the money will be steered toward makers of leading-edge semiconductors, a category that includes TSMC, Samsung and Intel. All three companies have already broken ground on major expansions of their U.S. facilities.The remaining third is expected to go toward legacy chips, which are heavily used in cars, appliances and military equipment.Another $11 billion of funding is expected to go toward building a handful of chip research centers around the country. Government and academic institutions in Texas, Arizona, Georgia, Indiana, Florida and Ohio have filed documents describing why they should be considered for funding. Even tiny Guam has raised its hand.One challenge for the Commerce Department will be to distribute the money widely enough across the nation to create several thriving “ecosystems” that can bring together raw materials, research and manufacturing capacity, but not undermine the effort by spreading it too thinly. With dozens of companies, universities and other players interested in snagging a share, the funding could go fast.Commerce Secretary Gina Raimondo told reporters on Wednesday that the goal was to create “at least two” new clusters of manufacturing capacity for leading-edge chips, in addition to facilities producing other kinds of semiconductors. Each cluster would employ thousands of workers and support a web of businesses supplying the raw materials and services they need.“We have very clear national security goals, which we must achieve,” Ms. Raimondo said, noting that not every chip maker will get what it wants. “I suspect there will be many disappointed companies who feel that they should have a certain amount of money, and the reality is the return on our investment here is the achievement of our national security goal. Period.”The competition has intensified as the Biden administration prepares to release the ground rules for applications next week. The grants, which can range up to $3 billion or more per project, could start going out this spring.Executives say huge spending by governments in South Korea, Taiwan, China and elsewhere has helped shape the chip industry globally. And the current U.S. policy push could again alter the market, by giving some companies advantages that allow them to edge out competitors.Most chip companies, in publicly discussing the subsidies, have stressed the common goal of bolstering U.S. production. But clear differences among them have emerged. Many are outlined in the more than 200 filings that companies, organizations, universities and others submitted to the Commerce Department last March.Beyond extolling the merits of their own manufacturing plans, some applicants made the case that rival projects deserved less funding or should face strict limits on how they operated, though few companies mentioned their competitors by name.Intel, along with other U.S.-based firms like GlobalFoundries and SkyWater Technology, expressed concerns about foreign-owned companies, including whether their U.S. factories could continue operating in the event of a crisis in their home country.Taiwan Semiconductor Manufacturing Company, which is building a factory site in Phoenix, has objected to “preferential treatment based on the location of a company’s headquarters.”Adriana Zehbrauskas for The New York TimesIntel has argued that foreign investment is welcome, but that its longtime concentration of chip design, research and manufacturing in the United States meant that it should get special consideration.But competitors argue that investing heavily in Intel could be a risky bet for the U.S. government, and some Biden administration officials have questioned whether Intel can follow through on its plans to catch up to its competitors technologically. The company has suffered from a severe drop in sales and announced on Wednesday that it would cut its stock dividend.U.S. officials have also stressed the need to support a U.S. expansion by TSMC, in part because it produces leading-edge chips crucial to the military.TSMC, which has broken ground on a $40 billion investment in two advanced factories in Arizona, countered in its filing that “preferential treatment based on the location of a company’s headquarters” would not be an effective or efficient use of U.S. money. AMD, one of TSMC’s largest customers, has advocated its U.S. expansion.AMD and Intel, both based in Santa Clara, Calif., have competed fiercely for the market for microprocessor chips.In its filing in March, AMD expressed concerns about whether certain unnamed competitors had proved that they could operate effectively as a foundry and make leading-edge chips. Intel has struggled on both counts. And AMD highlighted the risk that grant recipients would not immediately spend that money to outfit their factories with equipment.“Any facility receiving federal assistance must be operational upon completion of construction,” AMD wrote. “A facility that sits idle or is held in reserve for demand increases should immediately forfeit any federal funds.”Mr. Thompson of Intel declined to comment on the email. But he defended the “smart capital” strategy articulated by Patrick Gelsinger, Intel’s chief executive, which has stressed building factory shells and then investing to equip them in accordance with market demand.Intel is continuing to follow that strategy with construction projects in Arizona, New Mexico and Ohio, to ensure that its new facilities are built out “in alignment with the market,” Mr. Thompson said. But Intel has no intention of using the government money for “basically just building shells,” he said. “The goal is to ensure that we have the capacity to support our customers.”Ana Swanson reported from Washington, and Don Clark from San Francisco. More

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    How Arizona Is Positioning Itself for $52 Billion to the Chips Industry

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    The state has become a hub for chip makers including Intel and TSMC, as the government prepares to release a gusher of funds for the strategic industry.In recent weeks, Gina Raimondo, the commerce secretary, has talked with Senator Mark Kelly of Arizona, spent time with the president of Arizona State University and appeared at a conference with the mayor of Phoenix.Their discussions centered on one main topic: chips.Ms. Raimondo is in charge of handing out $52 billion for semiconductor manufacturing and research under the CHIPS Act, a funding package intended to expand domestic production of the foundational technology, which acts as the brains of computers. The legislation, which passed in August, is a prime piece of President Biden’s industrial policy and part of a push to ensure America’s economic and technology leadership over China.Arizona wants to make sure it is in position for a portion of that once-in-a-generation gusher of federal funding, for which the Commerce Department will begin taking applications after Thursday. As a result, Arizona officials have inundated Ms. Raimondo to promote the state’s growing chip industry and talked with the chief executives of giant chip companies such as Intel and Taiwan Semiconductor Manufacturing Company.Arizona, which is vying for subsidies along with Texas, New York and Ohio, may have a head start on the action. The state has been home to semiconductor makers since the 1940s and has 115 chip-related companies, whereas there is one major manufacturer in Ohio.Arizona has also led the nation in chip investments since 2020, with the announcements of two new chip-making plants by TSMC and two additional factories from Intel that will cost a combined $60 billion. State leaders had helped persuade the companies to open the facilities by offering big tax breaks and water and other infrastructure grants. They also promised to expand technical and engineering education in the state.State officials and chip companies also acted as a lobbying bloc in Washington. They helped shape the CHIPS Act to include federal tax credits, subsidies, and research and work force grants. TSMC expanded its lobbying staff to 19 people from two in two years, and Intel spent more than $7 million in lobbying efforts last year, the most it had spent in two decades. Arizona State University spent $502,000 on lobbying last year, also the most in two decades.“It has been an intentional and an all-hands-on-deck effort,” said Sandra Watson, president of the Arizona Commerce Authority, a nonprofit economic development organization that has helped lead state efforts to attract chip companies and push for the CHIPS Act.Sandra Watson, president of the Arizona Commerce Authority, hosted more than 20 chief executives of chip companies at the Super Bowl this month.Caitlin O’Hara for The New York TimesThe Commerce Department is expected to soon begin handing out $39 billion in subsidies to semiconductor makers, later opening the process to companies, universities and others to apply for $13.2 billion in research and work force development subsidies. The CHIPS Act also provides an investment tax credit for up to 25 percent of a manufacturer’s capital expenditure costs.Ms. Raimondo has described the process as a “race” among states. “Every governor, every state legislature, every president of public universities in every state ought to be now putting their plan of attack together,” she said in August during a visit to Arizona State University’s tech research and development center. “This is going to be a competitive process.”The Commerce Department declined to comment.Arizona’s history with chip manufacturing stretches back to 1949, when the telecom hardware and services provider Motorola opened a lab in Phoenix that later developed transistors. In 1980, Intel built a semiconductor plant in Chandler, a suburb southeast of Phoenix, drawn by the state’s low property taxes, relative proximity to its Silicon Valley headquarters and stable geology. (Earthquakes are rare in Arizona.)During President Donald J. Trump’s administration, he pushed an “America First” policy agenda. That opened an opportunity for Doug Ducey, a Republican who was then Arizona’s governor, and other state officials to transform their economy into a tech hub.Arizona’s governor at the time, Doug Ducey, and Commerce Secretary Gina Raimondo while touring the TSMC construction site in December.T.J. Kirkpatrick for The New York TimesIn 2017, Mr. Ducey and other Arizona officials traveled to Taiwan to meet with executives of TSMC, the world’s biggest maker of leading-edge chips. They promoted the state’s low taxes, its business-friendly regulatory environment and Arizona State University’s engineering school of more than 30,000 students.Mr. Ducey, who was close to Mr. Trump, also had calls with Commerce Secretary Wilbur Ross, Defense Secretary Mark Esper and Secretary of State Mike Pompeo on financial incentives to expand domestic production of chips.“My job is to sell Arizona,” Mr. Ducey said. “In this case, it was to sell Arizona to TSMC but also to the administration.”In 2019, Mr. Ducey helped set up calls between the cabinet secretaries and TSMC’s executives to lock in a deal to open manufacturing plants in Arizona. The state promised tax credits and other financial incentives to help offset costs for the company to move production to the United States from Taiwan.In May 2020, TSMC announced plans to build a $12 billion factory in Phoenix. Later that year, the city provided TSMC with $200 million in infrastructure incentives, including water lines, sewage and roads. One traffic light would cost the city $500,000.“TSMC appreciates the support from our dedicated partners on the state, local and federal levels,” said Rick Cassidy, the chief executive of TSMC Arizona, adding that the CHIPS Act funds will enable the company and its suppliers to expand “for years to come.”The CHIPS Act is a prime piece of President Biden’s industrial policy. He toured TSMC’s Arizona plant in December.T.J. Kirkpatrick for The New York TimesIn early 2021, Pat Gelsinger, Intel’s chief executive, announced a sweeping strategy to increase U.S. production of chips. States began soliciting the company. Arizona officials highlighted their long relationship with Intel and perks, such as the state’s low property and business taxes.Intel soon announced a $20 billion expansion in Chandler, with two additional factories that would bring 3,000 new jobs to the state. Chandler also approved $30 million in water and road improvements for the new plants.“The Arizona government has been a great collaborator,” said Bruce Andrews, Intel’s chief government affairs officer. “By investing in semiconductors early, they created an ecosystem that has had a jobs multiplier effect and massive economic benefits.”But some of the tax breaks have rankled Arizona residents, who say the moves have hurt funding for public schools. The state ranks 47th in per-student spending.“We need to bring business to our state, but we need to look at balance,” said Beth Lewis, the executive director of Save Our Schools in Arizona. “Corporations are choosing not to settle in Arizona because of our devastated public education system.”Arizona pressed ahead with pushing Congress to create legislation for chip subsidies. In March 2021, Senator Kelly joined Senators John Cornyn, Republican of Texas, and Mark Warner, Democrat of Virginia, the authors of legislation that would become the CHIPS Act, in a call with the new Biden administration to push for the White House’s support of funding.Mr. Kelly, an early sponsor of the CHIPS Act, became a chief negotiator on the legislation in Congress. He negotiated the inclusion of a four-year 25 percent investment tax credit in the bill, including a provision that ensured Intel and TSMC would get the tax credits even though their Arizona factory projects were announced before the bill would go into effect.Mr. Kelly also helped the president of Arizona State University, Michael Crow, lobby for the inclusion of more than $13 billion in grants for research and development and work force training. And Mr. Kelly and state leaders hosted administration officials at events to showcase the state’s semiconductor efforts as part of the White House’s manufacturing strategy.Senator Mark Kelly of Arizona at TSMC’s factory in December.Adriana Zehbrauskas for The New York Times“We have the potential to lead the nation in microchip production,” Mr. Kelly said in a statement. “I was honored to lead this effort, and now I’m working to maximize it for Arizona”Mr. Ducey, who left office when his term ended in January, pushed for more tech-friendly policies, including an income-tax cut. He also said he would use $100 million that the state had received from federal Covid grants to attract more chip companies and help them apply for funds provided by the CHIPS Act.In December, TSMC announced a second factory that would bring its total investment in Arizona to $40 billion. Mr. Biden and Ms. Raimondo traveled to Phoenix to speak at the announcement, with Mr. Kelly accompanying them on Air Force One.Arizona officials continue to pitch semiconductor companies to open factories in the state.This month, Ms. Watson hosted more than 20 chief executives of chip companies at the Super Bowl in Glendale. Katie Hobbs, Arizona’s new governor and a Democrat, and Mr. Kelly heralded how the state could benefit from the CHIPS Act.“There’s a robust pipeline,” Ms. Watson said. More

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    Ford Follows Tesla in Cutting Electric Vehicle Prices

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    The automaker reduced the price of the Mustang Mach-E by up to $5,900 after Tesla slashed prices of its cars by as much as 20 percent.Ford Motor said on Monday that it was cutting prices on its top-selling battery-powered model, the Mustang Mach-E, and increasing production of the sport utility vehicle. It was the latest sign of intensifying competition in the electric car market.Two weeks ago, Tesla slashed prices of its electric cars by as much as 20 percent in response to softening demand around the world.The price cuts for the two most affordable versions of the Mach-E amounted to less than $1,000 each. Other models, with longer-range batteries and premium options, were reduced $3,680 to $5,900, reductions of 6 percent to 9 percent.“We want to make E.V.s more accessible, so we’re increasing production and reducing prices across the Mach-E lineup,” Ford’s chief executive, Jim Farley, said on Twitter. He added that “with higher production, we’re reducing costs, which allows us to share these savings with customers.”The lowest-priced Mustang Mach-E — a rear-wheel-drive model with a standard battery — now has a list price of $45,995, a reduction of $900. The high-performance Mach-E GT with an extended-range battery now sells for $63,995, a cut of $5,900.Tesla’s least expensive car is the Model 3, which is smaller than the Mustang Mach-E and starts at $43,990. The all-wheel-drive Model Y, a more direct competitor of the electric Mustang, starts at $53,490. An all-wheel-drive Mustang Mach-E with comparable battery range now lists for $53,995.Electric vehicles priced below $55,000 can qualify for federal tax credits of $7,500 that were made available starting Jan. 1 under the Inflation Reduction Act. Ford’s price cuts will make more versions of the Mach-E eligible for the credit.Ford said the new prices would automatically apply to customers who had placed orders and were waiting for their cars. Ford’s credit division is also offering subsidized interest rates as low as 5.34 percent on Mach E orders placed between Jan. 30 and April 3.Tesla has long dominated the electric car market, which it largely had to itself until the last couple of years, but is increasingly encountering stiff competition. Its rate of growth has slowed in China, where its is now outsold by a local manufacturer, BYD. In addition to Ford, Volkswagen, Hyundai, Kia and other automakers have introduced electric models in the United States that are selling well and are generally cheaper than Tesla’s luxury models.In 2022, Ford sold just under 40,000 Mach-Es, about 45 percent more than in 2021. That made the Mach-E the third-best-selling electric model after Tesla’s Model Y and Model 3.For much of the last two years, Tesla, Ford and other automakers raised prices of electric vehicles because demand for battery-powered cars far outstripped supply. But demand for cars and other big-ticket goods has weakened in recent months as the Federal Reserve has raised interest rates significantly. Fed policymakers are expected to slow their rate increases at their first meeting of the year on Wednesday. More

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    Climate Change May Bring New Era of Trade Wars, as E.U. and U.S. Spar

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    Countries are pursuing new solutions to try to mitigate climate change. More trade fights are likely to come hand in hand.WASHINGTON — Efforts to mitigate climate change are prompting countries across the world to embrace dramatically different policies toward industry and trade, bringing governments into conflict.These new clashes over climate policy are straining international alliances and the global trading system, hinting at a future in which policies aimed at staving off environmental catastrophe could also result in more frequent cross-border trade wars.In recent months, the United States and Europe have proposed or introduced subsidies, tariffs and other policies aimed at speeding the green energy transition. Proponents of the measures say governments must move aggressively to expand sources of cleaner energy and penalize the biggest emitters of planet-warming gases if they hope to avert a global climate disaster.But critics say these policies often put foreign countries and companies at a disadvantage, as governments subsidize their own industries or charge new tariffs on foreign products. The policies depart from a decades-long status quo in trade, in which the United States and Europe often joined forces through the World Trade Organization to try to knock down trade barriers and encourage countries to treat one another’s products more equally to boost global commerce.Now, new policies are pitting close allies against one another and widening fractures in an already fragile system of global trade governance, as countries try to contend with the existential challenge of climate change.“The climate crisis requires economic transformation at a scale and speed humanity has never attempted in our 5,000 years of written history,” said Todd N. Tucker, the director of industrial policy and trade at the Roosevelt Institute, who is an advocate for some of the measures. “Unsurprisingly, a task of this magnitude will require a new policy tool kit.”The current system of global trade funnels tens of millions of shipping containers stuffed with couches, clothing and car parts from foreign factories to the United States each year, often at astonishingly low prices. But the prices that consumers pay for these goods do not take into account the environmental harm generated by the far-off factories that make them, or by the container ships and cargo planes that carry them across the ocean.A factory in Chengde, China. U.S. officials believe they must lessen a dangerous dependence on goods from China.Fred Dufour/Agence France-Presse — Getty ImagesAmerican and European officials argue that more needs to be done to discourage trade in products made with more pollution or carbon emissions. And U.S. officials believe they must lessen a dangerous dependence on China in particular for the materials needed to power the green energy transition, like solar panels and electric vehicle batteries.The Biden administration is putting in place generous subsidies to encourage the production of clean energy technology in the United States, such as tax credits for consumers who buy American-made clean cars and companies building new plants for solar and wind power equipment. Both the United States and Europe are introducing taxes and tariffs aimed at encouraging less environmentally harmful ways of producing goods.Biden administration officials have expressed hopes that the climate transition could be a new opportunity for cooperation with allies. But so far, their initiatives seem to have mainly stirred controversy when the United States is already under attack for its response to recent trade rulings.The administration has publicly flouted several decisions of World Trade Organization panels that ruled against the United States in trade disputes involving national security issues. In two separate announcements in December, the Office of the United States Trade Representative said it would not change its policies to abide by W.T.O. decisions.But the biggest source of contention has been new tax credits for clean energy equipment and vehicles made in North America that were part of a sweeping climate and health policy bill that President Biden signed into law last year. European officials have called the measure a “job killer” and expressed fears they will lose out to the United States on new investments in batteries, green hydrogen, steel and other industries. In response, European Union officials began outlining their own plan this month to subsidize green energy industries — a move that critics fear will plunge the world into a costly and inefficient “subsidy war.”The United States and European Union have been searching for changes that could be made to mollify both sides before the U.S. tax-credit rules are settled in March. But the Biden administration appears to have only limited ability to change some of the law’s provisions. Members of Congress say they intentionally worded the law to benefit American manufacturing.Biden administration is putting in place subsidies to encourage the production of clean energy technology in the United States, such as tax credits for consumers who buy American-made clean cars.Brittany Greeson for The New York TimesEuropean officials have suggested that they could bring a trade case at the World Trade Organization that might be a prelude to imposing tariffs on American products in retaliation.Valdis Dombrovskis, the European commissioner for trade, said that the European Union was committed to finding solutions but that negotiations needed to make progress or the European Union would face “even stronger calls” to respond.“We need to follow the same rules of the game,” he said.Anne Krueger, a former official at the International Monetary Fund and World Bank, said the potential pain of American subsidies on Japan, South Korea and allies in Europe was “enormous.”“When you discriminate in favor of American companies and against the rest of the world, you’re hurting yourself and hurting others at the same time,” said Ms. Krueger, now a senior fellow at the School of Advanced International Studies at Johns Hopkins University.But in a letter last week, a collection of prominent labor unions and environmental groups urged Mr. Biden to move forward with the plans without delays, saying outdated trade rules should not be used to undermine support for a new clean energy economy.“It’s time to end this circular firing squad where countries threaten and, if successful, weaken or repeal one another’s climate measures through trade and investment agreements,” said Melinda St. Louis, the director of the Global Trade Watch for Public Citizen, one of the groups behind the letter.Valdis Dombrovskis, the European commissioner for trade, has pressed the United States to negotiate more on its climate-related subsidies for American manufacturing.Stephanie Lecocq/EPA, via ShutterstockOther recent climate policies have also spurred controversy. In mid-December, the European Union took a major step toward a new climate-focused trade policy as it reached a preliminary agreement to impose a new carbon tariff on certain imports. The so-called carbon border adjustment mechanism would apply to products from all countries that failed to take strict actions to cut their greenhouse gas emissions.The move is aimed at ensuring that European companies that must follow strict environmental regulations are not put at a disadvantage to competitors in countries where laxer environmental rules allow companies to produce and sell goods more cheaply. While European officials argue that their policy complies with global trade rules in a way that U.S. clean energy subsidies do not, it has still rankled countries like China and Turkey.The Biden administration has also been trying to create an international group that would impose tariffs on steel and aluminum from countries with laxer environmental policies. In December, it sent the European Union a brief initial proposal for such a trade arrangement.The idea still has a long way to go to be realized. But even as it would break new ground in addressing climate change, the approach may also end up aggravating allies like Canada, Mexico, Brazil and South Korea, which together provided more than half of America’s foreign steel last year.Under the initial proposal, these countries would theoretically have to produce steel as cleanly as the United States and Europe, or face tariffs on their products.A steel plant in Belgium. Under the initial proposal, countries would theoretically have to produce steel as cleanly as the United States and Europe, or face tariffs.Kevin Faingnaert for The New York TimesProponents of new climate-focused trade measures say discriminating against foreign products, and goods made with greater carbon emissions, is exactly what governments need to build up clean energy industries and address climate change.“You really do need to rethink some of the fundamentals of the system,” said Ilana Solomon, an independent trade consultant who previously worked with the Sierra Club.Ms. Solomon and others have proposed a “climate peace clause,” under which governments would commit to refrain from using the World Trade Organization and other trade agreements to challenge one another’s climate policies for 10 years.“The complete legitimacy of the global trading system has never been more in question,” she said.In the United States, support appears to be growing among both Republicans and Democrats for more nationalist policies that would encourage domestic production and discourage imports of dirtier goods — but that would also most likely violate World Trade Organization rules.Most Republicans do not support the idea of a national price on carbon. But they have shown more willingness to raise tariffs on foreign products that are made in environmentally damaging ways, which they see as a way to protect American jobs from foreign competition.Robert E. Lighthizer, a chief trade negotiator for the Trump administration, said there was “great overlap” between Republicans and Democrats on the idea of using trade tools to discourage imports of polluting products from abroad.“I’m coming at it to get more American employed and with higher wages,” he said. “You shouldn’t be able to get an economic advantage over some guy working in Detroit, trying to support his family, from pollution, by manufacturing overseas.” More

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    U.S. Pours Money Into Chips, but Even Soaring Spending Has Limits

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    In September, the chip giant Intel gathered officials at a patch of land near Columbus, Ohio, where it pledged to invest at least $20 billion in two new factories to make semiconductors.A month later, Micron Technology celebrated a new manufacturing site near Syracuse, N.Y., where the chip company expected to spend $20 billion by the end of the decade and eventually perhaps five times that.And in December, Taiwan Semiconductor Manufacturing Company hosted a shindig in Phoenix, where it plans to triple its investment to $40 billion and build a second new factory to create advanced chips.The pledges are part of an enormous ramp-up in U.S. chip-making plans over the past 18 months, the scale of which has been likened to Cold War-era investments in the Space Race. The boom has implications for global technological leadership and geopolitics, with the United States aiming to prevent China from becoming an advanced power in chips, the slices of silicon that have driven the creation of innovative computing devices like smartphones and virtual-reality goggles.Today, chips are an essential part of modern life even beyond the tech industry’s creations, from military gear and cars to kitchen appliances and toys.Across the nation, more than 35 companies have pledged nearly $200 billion for manufacturing projects related to chips since the spring of 2020, according to the Semiconductor Industry Association, a trade group. The money is set to be spent in 16 states, including Texas, Arizona and New York on 23 new chip factories, the expansion of nine plants, and investments from companies supplying equipment and materials to the industry.The push is one facet of an industrial policy initiative by the Biden administration, which is dangling at least $76 billion in grants, tax credits and other subsidies to encourage domestic chip production. Along with providing sweeping funding for infrastructure and clean energy, the efforts constitute the largest U.S. investment in manufacturing arguably since World War II, when the federal government unleashed spending on new ships, pipelines and factories to make aluminum and rubber.“I’ve never seen a tsunami like this,” said Daniel Armbrust, the former chief executive of Sematech, a now-defunct chip consortium formed in 1987 with the Defense Department and funding from member companies.Sanjay Mehrotra, Micron Technology’s chief executive, at Onondaga Community College in Syracuse, N.Y., in October. The company is building a new manufacturing site nearby.Kenny Holston for The New York TimesWhite House officials have argued that the chip-making investments will sharply reduce the proportion of chips needed to be purchased from abroad, improving U.S. economic security.Kenny Holston for The New York TimesPresident Biden has staked a prominent part of his economic agenda on stimulating U.S. chip production, but his reasons go beyond the economic benefits. Much of the world’s cutting-edge chips today are made in Taiwan, the island to which China claims territorial rights. That has caused fears that semiconductor supply chains may be disrupted in the event of a conflict — and that the United States will be at a technological disadvantage.More on ChinaA Messy Pivot: As Beijing casts aside many Covid rules after nationwide protests, it is also playing down the threat of the virus. The move comes with its own risks.Space Program: Human spaceflight achievements show that China is running a steady space marathon rather than competing in a head-to-head space race with the United States.A Test for the Economy: China’s economy is entering a delicate period when it will face unique challenges, amid the prospect of rising Covid cases and wary consumers.New Partnerships: A trip by the Chinese leader Xi Jinping to Saudi Arabia showcased Beijing’s growing ties with several Middle Eastern countries that are longstanding U.S. allies and signaled China’s re-emergence after years of pandemic isolation.The new U.S. production efforts may correct some of these imbalances, industry executives said — but only up to a point.The new chip factories would take years to build and might not be able to offer the industry’s most advanced manufacturing technology when they begin operations. Companies could also delay or cancel the projects if they aren’t awarded sufficient subsidies by the White House. And a severe shortage in skills may undercut the boom, as the complex factories need many more engineers than the number of students who are graduating from U.S. colleges and universities.The bonanza of money on U.S. chip production is “not going to try or succeed in accomplishing self-sufficiency,” said Chris Miller, an associate professor of international history at the Fletcher School of Law and Diplomacy at Tufts University, and the author of a recent book on the chip industry’s battles.White House officials have argued that the chip-making investments will sharply reduce the proportion of chips needed to be purchased from abroad, improving U.S. economic security. At the TSMC event in December, Mr. Biden also highlighted the potential impact on tech companies like Apple that rely on TSMC for their chip-making needs. He said that “it could be a game changer” as more of these companies “bring more of their supply chain home.”U.S. companies led chip production for decades starting in the late 1950s. But the country’s share of global production capacity gradually slid to around 12 percent from about 37 percent in 1990, as countries in Asia provided incentives to move manufacturing to those shores.Today, Taiwan accounts for about 22 percent of total chip production and more than 90 percent of the most advanced chips made, according to industry analysts and the Semiconductor Industry Association.The new spending is set to improve America’s position. A $50 billion government investment is likely to prompt corporate spending that would take the U.S. share of global production to as much as 14 percent by 2030, according to a Boston Consulting Group study in 2020 that was commissioned by the Semiconductor Industry Association.“It really does put us in the game for the first time in decades,” said John Neuffer, the association’s president, who added that the estimate may be conservative because Congress approved $76 billion in subsidies in a piece of legislation known as the CHIPS Act.Still, the ramp-up is unlikely to eliminate U.S. dependence on Taiwan for the most advanced chips. Such chips are the most powerful because they pack the highest number of transistors onto each slice of silicon, and they are often held up a sign of a nation’s technological progress.Intel long led the race to shrink the number of transistors on a chip, which is usually described in nanometers, or billionths of a meter, with smaller numbers indicating the most cutting-edge production technology. Then TSMC surged ahead in recent years.But at its Phoenix site, TSMC may not import its most advanced manufacturing technology. The company initially announced that it would produce five-nanometer chips at the Phoenix factory, before saying last month that it would also make four-nanometer chips there by 2024 and build a second factory, which will open in 2026, for three-nanometer chips. It stopped short of discussing further advances.Morris Chang, founder of Taiwan Semiconductor Manufacturing Company, at the company’s site in Phoenix in December. The company said it would triple its investment there to $40 billion.Adriana Zehbrauskas for The New York TimesAt the TSMC event last month, President Biden highlighted the potential impact on tech companies that rely on TSMC for their chip-making needs.Adriana Zehbrauskas for The New York TimesIn contrast, TSMC’s factories in Taiwan at the end of 2022 began producing three-nanometer technology. By 2025, factories in Taiwan will probably start supplying Apple with two-nanometer chips, said Handel Jones, chief executive at International Business Strategies.TSMC and Apple declined to comment.Whether other chip companies will bring more advanced technology for cutting-edge chips to their new sites is unclear. Samsung Electronics plans to invest $17 billion in a new factory in Texas but has not disclosed its production technology. Intel is manufacturing chips at roughly seven nanometers, though it has said its U.S. factories will turn out three-nanometer chips by 2024 and even more advanced products soon after that.The spending boom is also set to reduce, though not erase, U.S. reliance on Asia for other kinds of chips. Domestic factories produce only about 4 percent of the world’s memory chips — which are needed to store data in computers, smartphones and other consumer devices — and Micron’s planned investments could eventually raise that percentage.But there are still likely to be gaps in a catchall variety of older, simpler chips, which were in such short supply over the past two years that U.S. automakers had to shut down factories and produce partly finished vehicles. TSMC is a major producer of some of these chips, but it is focusing its new investments on more profitable plants for advanced chips.“We still have a dependency that is not being impacted in any way shape or form,” said Michael Hurlston, chief executive of Synaptics, a Silicon Valley chip designer that relies heavily on TSMC’s older factories in Taiwan.The chip-making boom is expected to create a jobs bonanza of 40,000 new roles in factories and companies that supply them, according to the Semiconductor Industry Association. That would add to about 277,000 U.S. semiconductor industry employees.But it won’t be easy to fill so many skilled positions. Chip factories typically need technicians to run factory machines and scientists in fields like electrical and chemical engineering. The talent shortage is one of the industry’s toughest challenges, according to recent surveys of executives.The CHIPS Act contains funding for work force development. The Commerce Department, which is overseeing the doling out of grant money from the CHIPS Act’s funds, has also made it clear that organizations hoping to obtain funding should come up with plans for training and educating workers.Intel, responding to the issue, plans to invest $100 million to spur training and research at universities, community colleges and other technical educators. Purdue University, which built a new semiconductor laboratory, has set a goal of graduating 1,000 engineers each year and has attracted the chip maker SkyWater Technology to build a $1.8 billion manufacturing plant near its Indiana campus.Yet training may go only so far, as chip companies compete with other industries that are in dire need of workers.“We’re going to have to build a semiconductor economy that attracts people when they have a lot of other choices,” Mitch Daniels, who was president of Purdue at the time, said at an event in September.Since training efforts may take years to bear fruit, industry executives want to make it easier for highly educated foreign workers to obtain visas to work in the United States or stay after they get their degrees. Officials in Washington are aware that comments encouraging more immigration could invite political fire.But Gina Raimondo, the commerce secretary, was forthright in a speech in November at the Massachusetts Institute of Technology.Attracting the world’s best scientific minds is “an advantage that is America’s to lose,” she said. “And we’re not going to let that happen.” More