August 1, 2024

Applied Materials Inc (NASDAQ:AMAT) was down 7.49%, -$15.90 at close today. They faced a setback in securing funding under the Chips Act for a research and development center in Silicon Valley, as reported by Bloomberg on Thursday. The Commerce Department officials declined the chipmaking equipment maker’s proposal to receive U.S. funding for a $4 billion facility in Sunnyvale, California, according to sources familiar with the situation cited in the Bloomberg report.

A year ago, Applied Materials had announced its intentions to construct the facility and had expressed interest in obtaining government subsidies through the Chips and Science Act. The facility was scheduled for completion in 2026. However, reports in April indicated that the company was encountering challenges in obtaining government approval for the necessary funds, particularly after the Biden administration acknowledged facing high demand for funding allocations.

The CHIPS and Science Act, which was enacted in August 2022, allocated approximately $280 billion in new funding to enhance domestic chipmaking research and development. The act included $39 billion in subsidies for chip manufacturing within the United States, with companies such as TSMC, Samsung Electronics Co Ltd, and SK Hynix Inc receiving grants to establish chipmaking facilities in the country.

According to some reports the company might postpone or abandon its plans to build a $4 billion research and development facility in Silicon Valley due to a lack of government funding.