Kamala Harris visits Silicon Valley to highlight huge new Applied Materials chip project

Vice President Kamala Harris toured Silicon Valley’s Applied Materials on Monday to highlight White House support for the company’s just-announced $4 billion project in Sunnyvale aimed at rebuilding the lagging U.S semiconductor industry and making the U.S. less dependent on foreign-made silicon chips.

Harris, speaking to hundreds of technology industry workers and leaders at a company campus in Sunnyvale, said new federal incentives created by the 2022 CHIPS and Science Act enabled the Applied Materials project to speed development of advanced computer chips. Harris did not specify what incentives might be headed to the Santa Clara-based company, which makes chip-manufacturing equipment.

“As indispensable as semiconductors are today, they will become even more important in the future,” said Harris, citing the technology’s role in solar- and wind-power technology, satellite networks for high-speed internet, and artificial intelligence applications in medicine and agriculture.

The White House has frequently tapped the East Bay native to tout technology-related developments. She met earlier this month with industry CEOs and has warned of risks from generative AI. In August, she visited the Chabot Space and Science Center in Oakland to promote the U.S. space industry and in December convened the Biden administration’s first National Space Council meeting.

The CHIPS and Science Act directs $280 billion in spending over the next decade, including $200 billion for commercialization and research and development, and $53 billion for semiconductor manufacturing, R&D and workforce development, plus $24 billion in tax credits for chip making.

The silicon chip, the technology that gave this region its name, is today made mostly overseas. Harris’ visit reflects the White House’s push to reverse the decline in U.S. chip making, to support national security, the economy and the nation’s tech industries.

The U.S., once a major player in chip making with 37% of the world’s production in the ’90s, now makes 12%, according to an October report from consultancy giant McKinsey & Company, which has projected the size of the semiconductor market at $1 trillion by 2030. Pandemic-related supply chain snafus, particularly of the chips used in cars, highlighted the perils for the U.S. of heavy reliance on overseas-made semiconductors.

Applied Materials, along with Lam Research in Fremont and KLA Corporation in Milpitas, is among the world’s top chip-making equipment manufacturers, and chip-design titans Nvidia, Apple and Google keep Silicon Valley at the forefront of chip development, even as the manufacturing has largely moved overseas.

Silicon Valley companies are “the global leaders in semiconductor design,” said Sean Randolph, senior director of the Bay Area Council Economic Institute.

Applied Materials’ project, though not making semiconductors, will help build domestic chip making by “leveraging the expertise here in the Bay Area to accelerate the manufacturing process in the U.S. and globally with our partners,” Randolph said.

Harris’ visit comes a day after China banned chips from Idaho-based manufacturer Micron and as U.S. tech and political leaders fret that China’s threatening behavior toward Taiwan could lead to disruption of chip flow from Taiwan, which makes most of the world’s chips and nearly all the most sophisticated ones.

The new Applied Materials “EPIC” facility, slated for completion in early 2026, with the $4 billion spent over seven years, is to include a sterile room bigger than three football fields where chipmakers can have a dedicated space to work with “next-generation technologies and tools,” and university researchers can collaborate with chip-industry professionals, Applied Materials said.

“By investing in manufacturing capacity we will create a more resilient supply chain,” CEO Gary Dickerson told the crowd assembled under and around a large tent, where EPIC is to be located, next to the firm’s Maydan Technology Center.

Applied Materials said it expected facility construction to employ up to 1,500 construction workers, and that EPIC would create up to 2,000 new engineering jobs and potentially thousands more in related industries.

The amount the company intends to spend will depend on the level of federal support it receives via the 2022 CHIPS and Science Act, it said. Applied Materials last year received a $30 million grant from California intended to help the firm obtain CHIPS Act funding.

Quickly advancing artificial intelligence and the transition to cleaner energy are among tech industry trends that will accelerate chip demand in coming years, said Prabu Raja, president of Applied Materials’ semiconductor products group.

The bipartisan CHIPS and Science Act, enacted in August, has spurred major investment announcements by companies expecting to benefit. Micron, anticipating “grants and credits made possible” by the act, said in August it would spend $40 billion through 2029 to increase memory-chip manufacturing in the U.S. Also in August, semiconductor firms GlobalFoundries, until recently based in Santa Clara and now headquartered in New York, and Qualcomm of San Diego announced a multi-billion dollar partnership to make chips in GlobalFoundry’s New York plant.

Iconic Santa Clara chip maker Intel is working to complete a deal announced last year to buy Israeli semiconductor maker Tower Semiconductor, which owns factories in Newport Beach and San Antonio, Texas, as well as in Japan and Israel.

“The spirit of innovation, dare I say, is central to who we are,” Harris told the crowd gathered Monday. “As a proud daughter of California, I believe there are few places where that spirit burns brighter than right here in Silicon Valley.”