Texas Instruments announces award agreement for CHIPS and Science Act funding

Rhea-AI Summary

Texas Instruments (TXN) has secured up to $1.6 billion in CHIPS Act funding from the U.S. Department of Commerce to support three new 300mm semiconductor wafer fabs under construction in Texas and Utah. The company also expects to receive an estimated $6-8 billion in Investment Tax Credits from the U.S. Treasury for qualified manufacturing investments, plus $10 million for workforce development.

The funding will support projects through 2029, including cleanroom construction and tool installations at SM1 in Sherman, Texas, shell construction of SM2 (second fab in Sherman), and cleanroom construction at LFAB2 in Lehi, Utah. The three new fabs will create 2,000 direct company jobs and thousands of indirect jobs. The facilities will be powered by renewable electricity and designed to meet LEED Gold standards, with a 70% water reuse capability target.

Positive

• Secured $1.6 billion in CHIPS Act funding for manufacturing expansion
• Expected to receive additional $6-8 billion in Investment Tax Credits
• Creation of 2,000 new direct jobs plus thousands of indirect positions
• Expansion of manufacturing capacity with three new 300mm wafer fabs

Negative

• None.

Insights

Financial Analyst

The $1.6 billion CHIPS Act funding combined with an estimated $6-8 billion in tax credits represents a substantial government backing that will significantly reduce TI's capital expenditure burden for its fab expansion. This support effectively lowers the investment risk while maintaining TI's strong balance sheet position. The construction of three 300mm fabs positions TI to capture growing demand in critical markets like automotive and industrial, where analog chips command higher margins and longer product lifecycles.

The strategic placement of connected multi-fab sites enables operational synergies and cost efficiencies through shared infrastructure and resources. The renewable energy commitment, while requiring upfront investments, should yield long-term operational cost benefits through reduced energy expenses and potential carbon pricing advantages.

Semiconductor Industry Expert

The 300mm wafer fab expansion significantly strengthens TI's competitive position in the analog semiconductor space. The larger wafer size reduces per-unit production costs by approximately 40% compared to 200mm fabs, enabling TI to maintain its cost leadership. The geographic diversification across Texas and Utah, combined with increased domestic production capacity, enhances supply chain resilience and positions TI favorably amid growing geopolitical tensions affecting semiconductor supply.

The focus on analog and embedded processing chips targets high-margin, stable markets with extended product lifecycles. This strategy aligns with TI's historical strength in providing essential components for automotive and industrial applications, where qualification processes create high barriers to entry and customer switching costs.

Environmental Technology Specialist

TI's commitment to 100% renewable electricity for these fabs and 70% water reuse capability demonstrates forward-thinking environmental planning that will become increasingly valuable as climate regulations tighten. The LEED Gold certification target for all new fabs indicates comprehensive sustainability integration across facility design, construction and operations. These environmental commitments, while requiring initial investments, position TI favorably for future environmental regulations and customer sustainability requirements, particularly in the automotive sector where supply chain emissions are under increasing scrutiny.

NEWS HIGHLIGHTS:

• The U.S. Department of Commerce has awarded TI up to $1.6 billion in CHIPS Act funding to support three new 300mm semiconductor wafer fabs under construction in Texas and Utah.
• TI also expects to receive an estimated $6 billion to $8 billion from the U.S. Department of the Treasury's Investment Tax Credit for qualified U.S. manufacturing investments.
• The company will also receive up to $10 million to support workforce development.

LEHI, Utah and SHERMAN, Texas, Dec. 20, 2024 /PRNewswire/ -- Texas Instruments (TI) (Nasdaq: TXN) and the U.S. Department of Commerce today announced an award agreement of up to $1.6 billion in direct funding through the U.S. CHIPS and Science Act, following the preliminary memorandum of terms announced in August 2024. The funding will help support three of TI's new 300mm wafer fabs currently under construction in Texas and Utah. Support from the CHIPS Act, including the 25% investment tax credit, will help TI provide a geopolitically dependable supply of essential analog and embedded processing semiconductors.

"As the largest analog and embedded processing semiconductor manufacturer in the U.S., TI is uniquely positioned to provide dependable, low-cost 300mm semiconductor manufacturing capacity at scale," said Haviv Ilan, president and CEO of Texas Instruments. "The increasing number of electronic devices in our lives depend on our foundational chips, and we appreciate the support from the U.S. government to make the semiconductor ecosystem stronger and more resilient."

The CHIPS Act direct funding will support TI's investments through 2029 for three large-scale 300mm wafer fabs in Sherman, Texas (SM1 and SM2), and Lehi, Utah (LFAB2). Together, these fabs will manufacture tens of millions of analog and embedded processing chips every day that are critical to a variety of end markets, including automotive, industrial, personal electronics, communications equipment and enterprise systems.

Specifically, the CHIPS Act direct funding will be distributed upon completion of project milestones, supporting: 

• Cleanroom construction and tool installations at SM1 in Sherman, Texas;
• Shell construction of SM2, a second fab in Sherman, Texas; and
• Cleanroom construction and tool installations at LFAB2, a second fab in Lehi, Utah.

These connected, multi-fab sites in Texas and Utah will benefit from shared infrastructure, talent and technology sharing, and a strong network of existing suppliers and community partners. 

Combined, TI's three new fabs in Texas and Utah will create 2,000 company jobs, along with thousands of indirect jobs for construction, suppliers and supporting industries. TI is also investing in building its future workforce. As part of the CHIPS Act award agreement, TI will also receive up to $10 million for workplace development efforts in Texas and Utah.

Consistent with TI's longstanding commitment to responsible, sustainable manufacturing and environmental stewardship, the company's 300mm wafer fabs will be entirely powered by renewable electricity. Additionally, TI is committed to reducing overall water consumption across its operations, endeavoring to achieve a 70% water reuse capability in Sherman, Texas, and Lehi, Utah. All of TI's new 300mm fabs are also designed to meet LEED Gold standards for structural efficiency and sustainability.

Learn more:

• TI CHIPS Act press kit (includes images, video b-roll, fact sheet)
• TI Sherman, Texas, press kit
• TI Lehi, Utah, press kit

Notice regarding forward-looking statements

This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe TI's business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.

See Item 1A of TI's most recent Form 10-K for a detailed discussion of risk factors that could cause results to differ materially from the forward-looking statements. The forward-looking statements included in this release are made only as of the date of this release, and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances. If we do update any forward-looking statement, you should not infer that we will make additional updates with respect to that statement or any other forward-looking statement.

About Texas Instruments

Texas Instruments Incorporated (Nasdaq: TXN) is a global semiconductor company that designs, manufactures, and sells analog and embedded processing chips for markets such as industrial, automotive, personal electronics, communications equipment and enterprise systems. At our core, we have a passion to create a better world by making electronics more affordable through semiconductors. This passion is alive today as each generation of innovation builds upon the last to make our technology more reliable, more affordable and lower power, making it possible for semiconductors to go into electronics everywhere. Learn more at TI.com.

 

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SOURCE Texas Instruments

FAQ

How much CHIPS Act funding did Texas Instruments (TXN) receive?

Texas Instruments received up to $1.6 billion in CHIPS Act funding from the U.S. Department of Commerce.

Where are TXN's new semiconductor wafer fabs being constructed?

The new fabs are being constructed in Sherman, Texas (SM1 and SM2) and Lehi, Utah (LFAB2).

How many jobs will TXN's new semiconductor fabs create?

The three new fabs will create 2,000 direct company jobs and thousands of indirect jobs in construction, suppliers, and supporting industries.

What is the total expected government support for TXN's manufacturing expansion?

TXN expects to receive up to $1.6 billion in CHIPS Act funding, $6-8 billion in Investment Tax Credits, and $10 million for workforce development.

What sustainability measures is TXN implementing in its new fabs?

The new fabs will be powered by 100% renewable electricity, target 70% water reuse capability, and meet LEED Gold standards for efficiency and sustainability.