Texas Instruments secures up to $1.6 billion in funding for chip-manufacturing plants in Texas and Utah

By Ciara Linnane

The chip maker also expects an estimated $6 billion to $8 billion investment tax credit

Texas Instruments Inc. said Friday it has signed a preliminary agreement with the U.S. Department of Commerce for up to $1.6 billion in funding through the CHIPS and Science Act to support three 300mm semiconductor-wafer-manufacturing plants currently being built in Texas and Utah.

The stock (TXN) was up 1.3% premarket.

The chip maker also expects an estimated $6 billion to $8 billion in an investment tax credit from the U.S. Treasury for the project.

"The proposed direct funding, coupled with the investment tax credit, would help TI provide a geopolitically dependable supply of essential analog and embedded processing semiconductors," the company said in a statement.

The CHIPS Act was signed into law by President Biden in 2022 with the goal of investing almost $53 billion to boost domestic chip production and reduce the reliance of U.S. manufacturers on foreign suppliers, most of whom are based in Asia.

In addition to securing the supply of chips - used in everything from smartphones to cars and medical devices - the legislation aims to create thousands of high-paying jobs.

To date, the Commerce Department has announced more than $30 billion in proposed private sector investments in 23 projects in 15 states, according to a release from last week.

Texas Instruments will receive $10 million in funding for workforce development and expects to create more than 2,000 new IT jobs and thousands of indirect jobs for construction, suppliers and other supporting industries.

The company plans to invest more than $18 billion through 2029, as part of its broader plans for manufacturing.

Two of the three new fabs will be based in Sherman, Texas, with the other in Lehi, Utah. They will be fully powered using renewable electricity.

The stock has gained 18.5% in the year to date, outperforming the S&P 500 SPX, which has gained 16.2%.

-Ciara Linnane

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08-16-24 0708ET

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