According to a recent report by The Wall Street Journal, many large U.S. semiconductor companies have sparked political disputes within Congress over the government’s subsidies for the semiconductor industry, causing tens of billions of dollars in potential factory projects to be in trouble and possibly weakening some political and industrial Leaders reinvigorated ambitions for U.S. chip-making capabilities.

Many companies are waiting for Congress to pass a $52 billion stimulus package for chip production and research before planning further expansion plans, according to some company executives and funding proposal documents. Those expansions are expected to be funded in part from a subsidy package that has early bipartisan support in Congress as well as the Biden administration.

Under the bylaws of the Chip Act, the U.S. Congress has announced about $50 billion in factory investment over the past two years, with planned new facilities a top priority as the industry expands to meet growing demand. Critics of government-funded semiconductor makers say the industry is taking advantage of chip shortages and companies will keep pushing ahead with U.S. projects even without subsidies.

Government funding is aimed at revitalizing chip production in the U.S. as manufacturing has moved to Asia in recent decades because of a plethora of fiscal incentives and lower manufacturing costs. The U.S. share of global chipmaking capacity has fallen from 37% in 1990 to 12% today. Two years of chip shortages have shut down auto plants and soared prices for some electronics, prompting a domestic government incentive program.

Micron CEO Sanjay Mehrotra said: "We will need support from the federal government as well as state governments to make up for the 35%-45% cost differential that exists in overseas production."

Micron is in talks with several states to increase capacity. Incentives are key to the success of U.S. factory projects, but companies can’t keep delaying investment decisions because Congress has been slow to make a decision, locking plans to expand where it’s most economically viable. Micron plans to spend more than $150 billion over the next decade to boost manufacturing capabilities.

Chip companies have been lobbying Congress for financial support for years that would significantly reduce the cost of building new factories in the United States. Their calls were met with opposition from voices from both parties in the administration, arguing that the funding proposal was either a political split or that it should be tied to social policy promises, such as higher wages.

Senate Majority Leader Chuck Schumer said a vote on a bill that includes chip investment but no other provisions is expected as early as Tuesday, The Wall Street Journal reported. It remains uncertain whether the Senate will agree to move forward with this specific chip bill.

NXP is one of the world's largest suppliers of chips to the automotive industry, which is consuming chips at an unprecedented rate as car manufacturing becomes more complex. NXP is weighing expanding one of its two factories in Austin, Texas, to assist in securing incentive funding for the project, according to a May presentation of the proposal by consulting firm Kroll LLC hired by NXP, the filing said. Valued at about $2.6 billion.

NXP aims to finalize the project in the fourth quarter of this year and break ground in 2024, the report said. But if the Austin expansion doesn't work out, the company could expand its factory in Singapore, partner with other chipmakers in Europe, or outsource production to contract chipmakers in Asia.

NXP is also considering expanding its production facility in Arizona, according to a spokeswoman. The company confirmed other details of its expansion plans, adding that it would work to expand the industry.

In lobbying Congress to resolve differences and enact legislation, chip industry executives said that without U.S. subsidies, the expansion of production could be moved overseas, or development at home would be limited. The industry had hoped for the support of President Biden and some key members of Congress, prompting the passage of a bill to fund the incentives last year. However, the measure has not been included in the Covid-19 relief package as the industry had hoped, and partisan feuding has clouded the future of the legislation for months.

The funding measure is also not moving forward because of resistance from some Republicans who complained that Democrats had added spending measures unrelated to chips in the bill. Robert Reich, the labor secretary under President Clinton, said last month that the semiconductor strategy was a high priority. "Pure extortion" in a profitable industry.

Intel Corp. recently said it would move forward with its factory plans more cautiously without government incentives, and recently delayed a ribbon-cutting ceremony in Ohio. CEO Pat Gelsinger told The Washington Post on Tuesday at an event that the company could change its investment plans if funding isn't available.

German chipmaker Infineon is also considering plans to expand 7-chip capacity in Texas, according to filings seeking tax relief. Production could begin as early as this year, although the project depends on help from local, state and federal governments, the document states.

"In the absence of these incentives, the capital investment required for this expansion project would be less favorable than in the U.S. considering alternative regions where the former would not be economically viable," the company said in its filing, citing the Additional expansion options in Germany, Austria and Malaysia.

Infineon confirmed the details but declined to comment further.

Others seeking to tap government funding include smaller chip companies such as Pennsylvania-based II-VI, which is ramping up capacity at its state-owned factories, in hopes of a $1.5 billion expansion plan over the next five years. Chip-making equipment giant Applied Materials is considering building a $2 billion research facility in Texas, Arizona, California or New York, according to proposal documents.