SAN FRANCISCO, March 6 (Reuters) - U.S. officials have

earmarked close to $30 billion in subsidies for advanced

semiconductor manufacturing, aiming to bring cutting-edge

artificial-intelligence chip development and manufacturing to

American soil.

But with money set to start flowing in the next few weeks,

accomplishing that goal is far from certain, industry experts

say. The Biden administration must weigh how much taxpayer money

to allocate among Taiwan Semiconductor Manufacturing ( TSM ),

a powerful foreign leader, and Intel ( INTC ), a beleaguered

homegrown company whose turnaround efforts remain promising but

untested.

Betting on AI chips is also challenging in the rapidly

evolving industry. Handing out subsidies today to the likes of

Intel ( INTC ), TSMC or Samsung Electronics ( SSNLF ), which is also

vying for federal dollars and is the only other firm in the

world that can make advanced chips, does not guarantee security

in the AI landscape of the future.

"AI itself is moving so quickly, if you focus on today's AI

chips, maybe two years from now it's a whole different thing,"

said Jay Goldberg, chief executive of D2D Advisory, a finance

and strategy consulting firm. "As opposed to the (general) road

map of advanced chipmaking which we know pretty clearly for the

next decade."

The money will come from the U.S. CHIPS Act, which passed in

2022. Intel ( INTC ), TSMC and Samsung are all building factories in the

U.S. and are all likely to receive some degree of U.S.

subsidies. The main question is how U.S. officials allocate the

money to meet the goal of bolstering AI chip production.

"We don't manufacture or package any of the leading-edge AI

chips needed to fuel the innovation ecosystem and power our most

critical defense systems," U.S. Commerce Secretary Gina Raimondo

said in a speech last month. "We cannot build the next

generation of technological leadership on such a shaky

foundation."

The Commerce Department declined to comment.

MADE IN TAIWAN

TSMC, the global leader in making AI chips, has yet to

commit to bringing its most advanced technology to the United

States.

At the moment, TSMC manufactures chips for Nvidia ( NVDA ),

Advanced Micro Devices ( AMD ), Microsoft ( MSFT ) and

Alphabet's Google in Taiwan. The company is not

expected to bring its advanced 3-nanometer manufacturing, which

is already used to make iPhone 15 Pro chips, to Arizona until at

2027 or 2028, despite starting mass production in Taiwan last

year. It has not disclosed any plans to bring 2-nanometer

technology, which will start production next year in Taiwan, to

the U.S.

A TSMC spokesperson said the company has made "steady

progress in productive ongoing discussions with the U.S.

government on inventive funding" and its first factory in the

U.S. "will enable the leadership in the 5G and artificial

intelligence era for decades."

TSMC rival Samsung has a factory in Taylor, Texas, under

construction that is expected to deploy the company's most

advanced manufacturing technology. But according to analysts and

industry sources, Samsung has long struggled to manufacture

enough functional chips on each silicon wafer to make high-

volume manufacturing profitable.

In an emailed statement, Samsung referred Reuters to its

fourth-quarter earnings call, where executives said its advanced

manufacturing processes are mass-producing chips, and that

orders for its AI accelerator chips are increasing.

That leaves Intel ( INTC ), which has said it will carry out

its most cutting-edge manufacturing processes - called "18A" and

"14A" - in the U.S. But it has not publicly disclosed any major

customers who plan to use the technology to make AI chips.

Allocating a large chunk of CHIPS Act funding to Intel ( INTC ),

which many analysts expect the U.S. government to do, is

essentially a bet on Intel's ( INTC ) turnaround plan that CEO Pat

Gelsinger announced in early 2021 after taking over.

Intel ( INTC ) offers some advantages. AI chips are increasingly made

up of smaller "chiplets" that must be packaged together, and

Intel ( INTC ) says it can combine chips made in its own factories with

others fabricated by rivals such as TSMC.

"Their bias is that they're going to be the (manufacturer)

of choice for these crazy complex systems of chips. And they're

going to do that in the United States," said Ben Bajarin, chief

executive of analyst firm Creative Strategies.

But to become an AI chip powerhouse, Intel ( INTC ) has the difficult

task of retaking the manufacturing lead from TSMC. Then it must

transform its business to a service-oriented contract

manufacturer for outside customers.

While recently unveiled Intel ( INTC ) manufacturing technology looks

promising on paper, the reality is that almost every advanced AI

chip currently on the market is made by TSMC.

"The biggest issue they have is to execute," Dan Hutcheson,

vice chair at analyst firm TechInsights, said of Intel ( INTC ). "The

whole foundry business is a good year or two away before they

either make it or break it."

An Intel ( INTC ) spokesperson said in a statement that the company

is on track with its "18A" process, which it expects to be

"manufacturing-ready" in the second half of the year.