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CHIPS and Science Act

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CHIPS and Science Act
Great Seal of the United States
Other short titles
  • CHIPS Act of 2022
  • Research and Development, Competition, and Innovation Act
  • Supreme Court Security Funding Act of 2022
Long titleMaking appropriations for Legislative Branch for the fiscal year ending September 30, 2022, and for other purposes
NicknamesCHIPS-Plus
Enacted bythe117th United States Congress
EffectiveAugust 9, 2022
Citations
Public lawPub. L.Tooltip Public Law (United States)117–167 (text)(PDF)
Statutes at Large136Stat.1366
Legislative history
  • Introducedin the House of Representatives asH.R. 4346theSupreme Court Security Funding Act of 2022byTim Ryan(D–OH) on July 1, 2021
  • Committee considerationbyHouse Appropriations
  • Passed the Houseon July 28, 2021 (215–207)
  • Passed the Senateas theChips and Science Acton July 27, 2022 (64–33) with amendment
  • House agreed to Senate amendmenton July 28, 2022 (243–187–1)
  • Signed into lawby PresidentJoe Bidenon August 9, 2022

TheCHIPS and Science Actis a U.S. federal statute enacted by the117th United States Congressand signed into law by PresidentJoe Bidenon August 9, 2022. The act authorizes roughly $280 billion in new funding to boost domestic research and manufacturing ofsemiconductorsin the United States, for which it appropriates $52.7 billion.[1][2][3] The act includes $39 billion in subsidies for chip manufacturing on U.S. soil along with 25% investment tax credits for costs of manufacturing equipment, and $13 billion for semiconductor research and workforce training, with the dual aim of strengthening Americansupply chain resilienceand counteringChina.[4][5]: 1 It also invests $174 billion in the overall ecosystem of public sector research in science and technology, advancinghuman spaceflight,quantum computing,materials science,biotechnology,experimental physics,research security, social and ethical considerations, workforce development anddiversity, equity, and inclusionefforts atNASA,NSF,DOE,EDA,andNIST.[6][7][8][9][10][11]

The act does not have an official short title as a whole but is divided into three divisions with their own short titles: Division A is theCHIPS Act of 2022(where CHIPS stands for "Creating Helpful Incentives to Produce Semiconductors" ); Division B is theResearch and Development, Competition, and Innovation Act;and Division C is theSupreme Court Security Funding Act of 2022.[12]

By March 2024, analysts estimated that the act incentivized between 25 and 50 separate potential projects, with total projected investments of $160–200 billion and 25,000–45,000 new jobs. However, these projects are faced with delays in receiving grants due to bureaucratic hurdles and shortages of skilled workers, both during the construction phase and upon completion in the operational/manufacturing stage, where 40% of the permanent new workers will need two-year technician degrees and 60% will need four-year engineering degrees or higher.[13][14][15]In addition, Congress had routinely made several funding deals that underfunded key basic research provisions of the Act by tens of billions of dollars.[16][17]

History[edit]

TheCHIPS and Science Actcombines two bipartisan bills: theEndless Frontier Act,[18]designed to boost investment in domestic high-tech research, and theCHIPS for America Act,[19]designed to bring semiconductor manufacturing back to the U.S. The act is aimed at competing with China.[20]

TheEndless Frontier Actwas initially presented to SenatorsChuck Schumer(D-NY) andTodd Young(R-IN) byUnder Secretary of StateKeith Krachin October 2019, as part of the Global Economic Security Strategy to boost investment in high-tech research vital to U.S. national security.[21][22]The plan was to grow $150 billion in government R&D funding into a $500 billion investment, with matching investments from the private sector and a coalition of technological allies dubbed the "Techno-Democracies-10" (TD-10).[23][22]On May 27, 2020, Senators Young and Schumer, along with CongressmenRo Khanna(D-CA) andMike Gallagher(R-WI.), introduced the bipartisan, bicameralEndless Frontier Actto solidify the United States' leadership in scientific and technological innovation through increased investments in the discovery, creation, and commercialization of technology fields of the future.[24]

TheUnited States Innovation and Competition Act of 2021 (USICA)(S. 1260), formerly known as the Endless Frontier Act, was United States legislation sponsored bySenate Majority LeaderChuck Schumer and Senator Young authorizing $110 billion for basic and advanced technology research over a five-year period. Investment in basic and advanced research, commercialization, and education and training programs inartificial intelligence,semiconductors,quantum computing,advanced communications,biotechnologyand advanced energy, amounts to $100 billion. Over $10 billion was authorized for appropriation to designate ten regional technology hubs and create asupply chain crisis-response program.[25]

The CHIPS for America Act portion stemmed from Under Secretary of StateKrachand his team brokering the $12 billion on-shoring ofTSMC(Taiwan Semiconductor Manufacturing Company) to secure the supply chain of sophisticated semiconductors, on May 15, 2020.[26][27][28]Krach's stated strategy was to use theTSMCannouncement as a stimulus for fortifying a trusted supply chain by attracting TSMC's broad ecosystem of suppliers; persuading other chip companies to produce in U.S., especially Intel and Samsung; inspiring universities to develop engineering curricula focused on semiconductor manufacturing and designing a bipartisan bill (CHIPS for America) to provide the necessary funding.[29]This led to Krach and his team's close collaboration in creating the CHIPS for America component with SenatorsJohn Cornyn(R-TX) andMark Warner(D-VA).[30]In June 2020, Senator Warner joined U.S. SenatorJohn Cornynin introducing the $52 billion CHIPS for America Act.[31]

Both bills were eventually merged into theU.S. Innovation and Competition Act(USICA). On June 8, 2021, the USICA passed 68–32 in the Senate with bipartisan support. The House version of the Bill,America COMPETES Act of 2022(H.R. 4521), passed on February 4, 2022. The Senate passed an amended bill by substituting the text of H.R. 4521 with the text of the USICA on March 28, 2022. A Senate and House conference was required to reconcile the differences, which resulted in the bipartisanCHIPS and Science Act,or "CHIPS Plus".[32]The bill passed theU.S. Senateby a vote of 64–33 on July 27, 2022.[33]On July 28, the $280 billion bill passed theU.S. Houseby a vote of 243–187–1.[34]On August 1, 2022, the magazineEE Times(Electronic Engineering) dubbed Under Secretary of StateKeith Krach(as of February 2023,now the current Chairman of the Krach Institute for Tech Diplomacy atPurdue University) the architect of the CHIPS and Science Act.[29]The bill was signed into law by PresidentJoe Bidenon August 9, 2022.[35]

Background and provisions[edit]

PresidentJoe Bidendelivers remarks on the CHIPS and Science Act at asemiconductor fabrication plantinClay, New York,April 25, 2024.

The law constitutes an industrial policy initiative which takes place against the background of a perceivedAI Cold Warbetween the US and China, asartificial intelligencetechnology relies on semiconductors.[36]The law was considered amidst aglobal semiconductor shortageand intended to provide subsidies and tax credits to chip makers with operations in the United States. TheU.S. Department of Commercewas granted the power to allocate funds based on companies' willingness to sustain research, build facilities, and train new workers.[37]

For semiconductor and telecommunications purposes, the CHIPS Act designates roughly $106 billion. The CHIPS Act includes $39 billion in tax benefits, loan guarantees and grants, administered by the DOC to encourage American companies to build new chip manufacturing plants in the U.S.[38]Additionally, $11 billion would go toward advanced semiconductor research and development, separable into $8.5 billion of that total going to theNational Institute for Standards and Technology,$500 million toManufacturing USA,and $2 billion to a new public research hub called the National Semiconductor Technology Center. $24 billion would go to a new 25 percent advanced semiconductor manufacturing tax credit to encourage firms to stay in the United States, and $200 million would go to theNational Science Foundationto resolve short-term labor supply issues.[6][39]

According toMcKinsey,"The CHIPS Act allocates $2 billion to theDepartment of Defenseto fund microelectronics research, fabrication, and workforce training. An additional $500 million goes to theDepartment of Stateto coordinate with foreign-government partners on semiconductor supply chain security. And $1.5 billion funds the USA Telecommunications Act of 2020, which aims to enhance competitiveness of software and hardware supply chains of openRAN5Gnetworks. "[6][39](The open RAN research innovation fund is controlled by theNational Telecommunications and Information Administration.)[40]Companies are subjected to a ten-year ban prohibiting them from producing chips more advanced than28 nanometersin China and Russia if they are awarded subsidies under the act.[41]

The act authorizes $174 billion for uses other than semiconductor and telecom technologies.[6][7]It authorizes, but does not appropriate, extendedNASAfunding for theInternational Space Stationto 2030, partially funds theArtemis programreturning humans to the Moon, and directs NASA to establish a Moon to Mars Program Office for ahuman mission to Marsbeyond the Artemis program. The bill also obligates NASA to perform research into further domesticating its supply chains and diversifying and developing its workforce, reducing theenvironmental effects of aviation,integratingunmanned aerial vehicledetection withair traffic control,investigatingnuclear propulsionfor spacecraft, continuing thesearch for extraterrestrial intelligenceandxenologyefforts, and boostingastronomical surveysforNear-Earth objectsincluding theNEO Surveyorproject.[1][42]

The law could potentially invest $67 billion in accelerating advanced zero-emissions technologies (such as improvedenergy storage,hydrogen economytechnologies, andcarbon capture and storage) to mass markets, advancing building efficiency, and improvingclimate scienceresearch, according to the climate action think tankRocky Mountain Institute.The law would invest $81 billion in the NSF, including new money forSTEMeducation (it recommends $100 million in rural schools, a 50 percent increase in Noyce Teaching Scholarships, and $300 million in a "STEM Teacher Corps" )[9]and defense against foreignintellectual property infringement,and $20 billion in the new Directorate for Technology, Innovation, and Partnerships, which would be tasked with deploying the above technologies as well as promoting social and ethical considerations, and authorizes but does not appropriate $12 billion forARPA-E.[8][11]It contains annual DOE budget increases for other purposes includingsupercomputer,nuclear fusionandparticle acceleratorresearch as well asminority-serving institutionoutreach and workforce development for teachers, and directs the DOC to establish $10 billion worth of research hubs in post-industrial rural and urban communities that have been subjected to historical underinvestment.[6][9][7][43]

As a national security law, the act contains a variety of provisions related to research ethics, foreign talent recruitment, restrictions onConfucius Institutes,and establishing new research security initiatives in theUnited States Department of Energy,NIST, and the NSF.[44]

The law makes extensive recommendations to the NSF to add social, legal, and ethical considerations to the award process in all of its research activities, hinting at an embrace ofpublic participatory technology assessment;the law doesnotinvoke an NSF doctrine called the "broader impacts criterion" to do so.[11]The law invests roughly $90 billion in strengthening and diversifying the STEM workforce through 33 programs, many of them incorporated deeply in the aforementioned semiconductor incentive, NSF labor supply, Tech Hubs, and DoD microelectronics R&D efforts; beyond those, the law authorizes $2.8 billion for standalone education projects, creates a Chief Diversity Officer position and codifies theEddie Bernice JohnsonINCLUDES Network to serve as the NSF's maindiversity, equity, and inclusionprogram. The law expands NSF demographic data collection and workplace inclusion efforts, and help to grantees in caregiver roles and the fight against sexual harassment.[9]The law emphasizes skilled technical jobs that do not require a bachelor's degree, and directs grant applicants to closely integrate workforce initiatives with job training; notably, it doesnotinvest in theUnited States Department of Laborto carry this out.[43][9]

Passage[edit]

PresidentJoe Bidensigning the bill into law on theSouth Lawnof the White House on August 9, 2022
July 27, 2022 Senate vote by state
Two yeas
Yea and not voting
Yea and nay
Two nays
Nay and not voting
July 28, 2022 House vote by congressional district
Democratic yea (219)
Democratic "present" (1)
Republican yea (24)
Republican nay (187)

Every senator in theSenate Democratic Caucusexcept forBernie Sandersvoted in favor of passing the CHIPS Act, and they were joined by seventeen Republican senators, including Senate Republican leaderMitch McConnell,Utah senatorMitt Romney,and South Carolina senatorLindsey Graham.[33]

Reception[edit]

Support[edit]

Many legislators and elected officials from across both the federal government and various state governments endorsed the passage. A large group of governors consisting of Pennsylvania'sTom Wolf,Alabama'sKay Ivey,California'sGavin Newsom,Kentucky'sAndy Beshear,Michigan'sGretchen Whitmer,Wisconsin'sTony Evers,Illinois'J. B. Pritzker,Kansas'Laura Kelly,and North Carolina'sRoy Cooperpushed for the passage of the bill back in November 2021.[45][46]

Separately, Ohio governorMike DeWine,whose state became the home ofIntel's newestsemiconductor fabrication plantin theColumbussuburb ofNew Albany,as well as Texas governorGreg Abbottand Texas senatorJohn Cornyn,whose state was the home of a major investment fromSamsung,each pushed for the bill to be passed and applauded its advancement through Congress.[47][48][49]It has received widespread support from chip firms, though they were concerned about the provision banning them from further investments in China.[50][51]

IntelCEOPat Gelsingersaid during an earnings call on September 30, 2022, that CHIPS Act subsidies were leading the company to explore building empty fab buildings (known as a "shell-first strategy" ) and aggressively acquire smaller competitors before installing any equipment, to avoid contributing to a predicted semiconductor glut.[52][53]

Opposition[edit]

The bill was criticized by Republican House leaderKevin McCarthyand senatorBernie Sandersas a "blank check", which the latter equated to a bribe to semiconductor companies.[33][54][55]China lobbied against the bill and criticized it as being "reminiscent of a 'Cold War mentality'".[56]

Concerns of protectionism[edit]

In a piece for theBrookings Institutionon December 20, 2022,Sarah Krepsand Paul Timmers expressed concerns regarding the protectionist provisions of the CHIPS and Science Act and the risk of a subsidy race with theEU,which proposed its ownEuropean Chips Actin 2022.[57]

Concerns of poor workforce development[edit]

In a piece for Brookings on May 25, 2023, Annelies Goger and Banu Ozkazanc-Pan found the Act was vague in many of its workforce development provisions, and criticized the statute for failing to offer a comprehensive, 'wraparound' approach to workforce development. They focused on its lack of supportive provisions for closing racial and gender gaps in STEM, its lack of requirements for equitable access to child care and non-academic mentorship programs beyond well-resourced communities, and its piecemeal approach to the innovation cycle.[58]Seven months later, Brookings staffers Martha Ross and Mark Muro also said the act's workforce provisions reflected a fragmented approach and their costs were difficult to determine.[43]

Environmental concerns[edit]

Writing in the Substack climate and finance newsletterThe Gigaton,Stanford MBA students Georgia Carroll and Zac Maslia criticized the Act for lacking incentives to addrenewable energyto chipmakers'base loads,andreclaimed waterandPFASalternatives to their material inputs, and noted the extensive environmental impact of the chipmaker and data center industry was at odds with the output from the new research programs of the Act.[59]

Concerns of inaction on unions, stock buybacks[edit]

Robert Kuttner,economic nationalistcommentator and editor ofThe American Prospect,expressed concerns that the bill did not provide enough resources to allow local residents near fabs to organize or form atrade union(thereby making unions rely too heavily oncommunity benefits agreementscompared to federal policy), that the Commerce Department would be too friendly to states withright-to-work laws(where the first new fabs would be built), that the bill did not restrictively define a "domestic company" regarding financing, and that fab owners would simply use CHIPS Act money tobuy back stocks.[60]In response to these concerns, on February 28, 2023,United States Secretary of CommerceGina Raimondopublished the first application for CHIPS Act grants, which encourages fab operators to useProject Labor Agreementsfor facilitating union negotiations during construction, outline their plans to curtail stock buybacks, share excess profits with the federal government, and open or point out nearbychild carefacilities.[61][53][62]The application led to over 200 statements of interest from private companies within the first month and a half, looking to invest across the entire semiconductor supply chain in 35 states;[63][64]by June 2023, the number had reached over 300.[65]TheProspectlater covered the lack of progress in PLA talks between key investorTSMCand local unions in Phoenix, and included both author Lee Harris's claim that the Raimondo guidance was insufficient in helping the talks, and liberal commentatorEzra Klein's criticism of the Raimondo guidance as excessive.[66]Harris later reported that as a consequence TSMC and its non-union subcontractors had routinely engaged in alleged wage theft, underreported safety violations, and cut out various installation procedures that would have prevented costly repairs, delaying its projects.[62]

Antitrust concerns[edit]

In February 2024, the antitrust think tankAmerican Economic Liberties Projectreleased a report evaluating the state of the semiconductor industry after the CHIPS and Science Act passed. It found that the Act was insufficient in dealing with what it saw as the effectivemonopolizationandmonopsonyof the American semiconductor industry by TSMC and by 'fabless' semiconductor firms that practiced routine outsourcing, such asNvidiaandApple Inc.,the result of shareholder-driven decisions. It also found the Act was insufficient in shoring up American mid-level, consumer market-oriented manufacturing by increasing competition and resiliency there. It recommended that the Commerce Department increasingly involve theFederal Trade Commissionand other antitrust agencies in its decision-making, incubate four mid-size competitors to TSMC, require 'fabless' firms to double their source numbers, and strategically levytariffsand fees on select consumer electronics deemed lacking in American sourcing.[67]

Impact[edit]

Science impact[edit]

In August 2023, around the one-year anniversary of the act becoming law, the NSF released a fact sheet outlining what it had done in the first year. Notably, the Technology, Innovation and Partnerships Directorate had awarded more than 760 grants and signed 18 contracts in research and development, and incentivized $4 billion in private capital and 35 exits from federal seed funding for private companies; the NSF issued two letters to employees on research security, increased STEM scholarship amounts, and created a National Secure Data Service per the act's directives.[68]The DOE also issued a press release to commemorate the anniversary, noting materials science, quantum computing and biotechnology had received major attention from the act, as well as efforts to improve energy use, materials sourcing transparency and recycling of computer chips.[10]

Project announcements[edit]

Many companies and ecosystem suppliers have announced investment plans since May 2020, when TSMC announced that it would build a fab in Arizona.[69][29][13][70]

These include (before the act passed on August 9, 2022):

  • In July 2021,GlobalFoundriesannounced plans to build a new $1 billionfabin Upstate New York.[71]
  • In November 2021,Samsungannounced plans to build a $17 billion semiconductor factory to begin operations in the second half of 2024. It is the largest foreign direct investment ever in the state of Texas.[72]
  • In January 2022, Intel announced an initial $20 billion investment that will generate 3,000 jobs, the largest investment in Ohio's history, with plans to grow to $100 billion investment in eight fabrication plants.[73]
  • In May 2022,Purdue Universitylaunched the nation's first comprehensive semiconductor degrees program in anticipation of the CHIPS Act spurring the creation of jobs for 50,000 trained semiconductor engineers in the United States.[74][75]
  • In May 2022,Texas Instrumentsbroke ground on new 300-mm semiconductor wafer fabrication plants in Sherman, Texas, and projected its investments will reach $30 billion and create as many as 3,000 jobs.[76]
  • In July 2022,SkyWaterannounced plans to build an advanced $1.8 billion semiconductor manufacturing facility with the government ofIndianaand Purdue University to pursue CHIPS funding.[77][78]

After the act passed:

  • In September 2022,Wolfspeedannounced it will build the world's largestsilicon carbidesemiconductor plant inChatham County, North Carolina.By 2030, the company expects to occupy more than one million square feet of manufacturing space across 445 acres, at a cost of $1.3 billion. The first phase of development is supported by about $1 billion in incentives from state, county, and local governments, and the company intends to apply for CHIPS act money.[79]
  • In October 2022,Micron Technologyannounced it will invest $20 billion in a new chip factory inClay, New York,to take advantages of the subsidies in the Act and signaled it could expand its investments to $100 billion over 20 years.[1][80][81]The state of New York granted the company $5.5 billion intax creditsas an incentive to move there, if it meets employment promises.[80]
  • In December 2022, TSMC announced the opening of the company's second chip plant inArizona,raising its investments in the state from $12 billion to $40 billion.[82]At that time, company officials said that construction costs in the U.S. were four to five times those in Taiwan (due to alleged higher costs of labor, red tape, and training) and that they were having difficulty finding qualified personnel (so some U.S. hires were sent for training in Taiwan for 12–18 months), so it will cost at least 50% more to make a TSMC chip in the United States than in Taiwan.[83][84]It was also reported that the project faced significant delays due to TSMC engaging in routine wage theft and not hiring unionized subcontractors to carry out pipe-fitting and other construction work properly, among other issues[62]such as withholding necessary skills training;[85]while in January 2024, TSMC said it had delayed the opening from 2026 to 2028 in order to evaluate the Biden administration's shifting approach to tax credits,[86]in April 2024, multiple TSMC employees, including trainees, also attested to the deep workplace cultural differences between Taiwanese and American engineers as a key factor in these delays.[87]
  • In February 2023,Texas Instrumentsannounced an $11 billion investment in a new 300-mm wafer fab inLehi, Utah.[88]
  • In February 2023,Integra Technologiesannounced a $1.8 billion proposal for expanding their Outsourced Semiconductor Assembly and Test (OSAT) operation inWichita, Kansas.[89]
  • In February 2023, EMP Shield announced a $1.9 billion proposal for a new campus inBurlington, Kansas.[90]
  • In April 2023,Boschannounced it was acquiring TSI Semiconductors and investing $1.5 billion in upgrades geared toward makingsilicon carbidechips at the TSI plant inRoseville, California.[91]
  • In June 2023, the French companyMersen,a subsidiary of Le Carbone Lorraine, announced it will spend $81 million on an expansion project inBay CityandGreenville, Michigandue to Michigan's state implementation of the CHIPS Act.[92]

The following projects were announced after the Act's first anniversary:


On May 13, 2024, Bloomberg News found a total of $32.8 billion had been allocated from the Act's $39 billion fund, with federal loans and tax credits set to reach $75 billion.Boston Consulting Groupand theSemiconductor Industry Associationestimated that by 2032, the United States would attain 28 percent of the world's market for advanced logic chips.[108]

State Department funds[edit]

The State Department has awarded $200 million in partnerships to academia and foreign companies as of July 2024under the Act's International Technology Security and Innovation Fund. The State Department has partnered with the governments ofCosta Rica,Panama,Vietnam,Indonesia,thePhilippinesandMexicoto distribute these funds, for technology incubation purposes.[109]

Tech Hubs[edit]

On October 23, 2023, the Biden administration announced that it directed theEconomic Development Administrationto focus on 31 areas (across 32 states andPuerto Rico) that it designated "Tech Hubs", for the purposes of spreading development evenly around the country, and incubating advanced technology and research. The Tech Hubs' organizers competed for a total of about $500 million in implementation grants, the first such appropriation out of a budgeted $10 billion over the next five years. The Biden administration also gave out "Strategy Development Grants" to 29 consortia of businesses, labor unions and governments in areas that lost out, encouraging further organizational improvements before trying again to become a Tech Hub.[110][111][112]

On July 2, 2024, the Biden administration announced that it would award $504 million in additional grants to 12 of the Tech Hubs to further their research. It also announced that the Tech Hub program had already attracted $4 billion in private sector investments.[113]

Macroeconomic impact[edit]

Estimates of the results of the CHIPS Act vary. The trade groupSemiconductor Industry Association,which analyzed announced investments from May 2020 to December 2022, claimed the CHIPS Act had led to more than 50 projects worth more than $200 billion that would create 44,000 jobs.[70]By the count of policy researcher Jack Conness, the CHIPS Act led to 37 projects worth $272 billion and a predicted 36,300 jobs as of May 31, 2024;when considered together withInflation Reduction Actinvestments, the total comes out to 196 projects worth $382 billion creating 126,700 jobs.[13]

Arizona is in line for the largest individual investment (TSMC's $65 billion investment, predicted to create 6,000 jobs), the most total jobs created (above 11,000) and the most dollars overall ($97.5 billion). Counties that voted for Biden in 2020 received more dollars from the Act ($227.9 million) than counties that voted for Donald Trump ($44 million).[13][114][115][64][116]

In December 2023, theFinancial Timesfound the IRA and CaSA together catalyzed over $224 billion in investments and over 100,000 new jobs by the preceding July.[117]

According to theNew Democrat-linked think tankCenter for American Progress,the CHIPS and Science Act, the Inflation Reduction Act, and theInfrastructure Investment and Jobs Acthave together led to more than 35,000 public and private investments.[118]The Biden administration itself claimed that as of June 14, 2024,the IIJA, CaSA, and IRA together catalyzed over $877 billion in private investment (including $395 billion in electronics and semiconductors, $177 billion in electric vehicles and batteries, $155 billion in clean power, $80 billion in clean energy tech manufacturing and infrastructure, and $42 billion in heavy industry) and over $552.8 billion in public infrastructure spending (including $78.4 billion in energy aside from tax credits in the IRA).[119][needs update]

California[edit]

Manufacturing[edit]

InCalifornia,where the semiconductor industry was founded inSilicon Valley,experts say that it is very unlikely that any new manufacturing facilities will be built, due to tight regulations, high costs of land and electricity, and unreliable water supplies.[5]These factors have contributed to the state's 33% decline in manufacturing jobs since 1990.[5]

Research[edit]

In May 2023,Applied Materialsannounced it would build a new collaborative advanced research and development center (distinct from traditional fabs) named the "EPIC Center", short for "Equipment and Process Innovation and Commercialization Center", by 2026, next to its existing facility inSunnyvale, California.The first known CHIPS Act-linked investment in Silicon Valley, the EPIC Center is worth $4 billion and is projected to create 2,000 jobs.[120][121][65]

Implementation[edit]

Underfunding of research agencies[edit]

In June 2023, after the passage of thedebt-ceiling deal,Federation of American Scientistsanalysts Matt Hourihan and Melissa Roberts Chapman andBrookings Instituteanalyst Mark Muro noted that theConsolidated Appropriations Act, 2023had underfunded three key agencies to the Science Act (the NSF, the DOE's Office of Science, and NIST) by $2.7 billion, or 12 percent compared to the Act's intent, and that the President's proposal for the2024 United States federal budgetwould likely shortchange them by $5.1 billion, or 19 percent compared to the Act's intent. Upon reviewing the effects the shortfalls would bring on defense policy and the economy, they recommended that more science and technology spending be moved into the mandatory category, as had been done with some semiconductor spending.[16]

In March 2024,Politicocontributor Christine Mui cited Hourihan in detailing how the Science Act interacted with later spending deals. In the actual 2024 budget, the NSF was underfunded by 42 percent compared to the Act's authorization and by 11 percent compared to its budget request; the Department of Energy's Office of Science was underfunded by 13 percent compared to the Act's authorization, while theEconomic Development Administration's regional hubs program was funded with $41 million ($541 million since 2022) against an annual authorization of $2 billion ($4 billion from 2022); NIST's budget, for which the 2023 Appropriations Act appropriated $1.564 billion and the Science Act authorized $1.562 billion, saw an 11 percent cut and NASA's budget fell 9 percent short of its request.[16][17][122]As of April 2024, CHIPS research agencies have been underfunded by over $8 billion.[123]

In April, Commerce Secretary Raimondo revealed the CHIPS Program Office would no longer fund commercial research and development investments via the Act's $39 billion fund, due to high demand totaling $70 billion, and said applicants must seek other sources of R&D funding.[124][125]

National Semiconductor Technology Center[edit]

The Act creates a National Semiconductor Technology Center to perform advanced research and development on semiconductors. In order to implement it, the Department of Commerce created a nonprofitpublic–private partnershipwithin NIST called Natcast in April 2023,[126]putting out a call for volunteers to select who will serve as board members.[127]In June, the selection committee was announced asJanet Fouttyof Deloitte,John L. Hennessyof Alphabet,Jason Gaverick Mathenyof RAND Corporation, Don Rosenberg of the University of California, San Diego, and Brenda Darden Wilkerson of AnitaB.org.[128]In September, the selection committee's activities were closed.[129]By the White House's announcement date, the board of trustees was finalized as Robin Abrams of Analog Devices Inc.,Craig Barrettof Intel, Reggie Brothers of the MIT Lincoln Lab,Nick Donofrioof IBM,Donna Dubinskyof Palm and Handspring, and Erica Fuchs of Carnegie Mellon University.[130]They selectedDeirdre Hanfordof Synopsys to serve as Natcast's CEO.[130]As of 1 April 2024,Natcast was promised at least $5 billion from the Biden administration, and is preparing to establish a Workforce Center of Excellence and "Community of Interest",[131]and begin its first $100 million grant competition in the summer, with a focus on improving artificial intelligence and making cutting-edge research cheaper.[132]

The current headquarters of NatCast are in a strip mall inPortola Valley, California.[133]States that have received huge amounts of semiconductor investments such as New York, Ohio, Arizona and Texas are vying as of May 2024to have the headquarters relocated there.[134]

Arrian Ebrahaimi and Jordan Schneider, writing for theInstitute for Progress,recommended the NSTC be structured with more centralization, work quickly and ambitiously to address market failures and externalities in chip research, and follow the management model of the similar Belgian companyIMEC.[135]

Other entities in the Fund[edit]

The Biden administration will also invest at least $200 million[131]in a new Manufacturing USA Institute under the Act, focused on spreading the use ofdigital twinsin semiconductor design,[136]and $300 million[131]in the NIST Advanced Packaging Manufacturing Program, focused on researching newsubstratechemistries forsemiconductor packaging.[137]The Commerce Department also awarded $100 million to 29 research projects in advancedmetrologyby February,[131]and released a new notice of opportunity for metrology research funding on April 16.[138]

Rule on business deals with countries of concern[edit]

In September 2023, the Commerce Department finalized its rule prohibiting Act funding recipients from expanding their manufacturing presence by more than 5 percent for advanced and 10 percent for mid-market chips through deals worth $100,000 or more, and brokering licensing agreements for technology transfers in China and other "countries of concern", as well as setting out how the Secretary would be notified of violations.[139][140]

Stock buybacks and economic equality[edit]

In October 2022, SenatorsElizabeth WarrenandTammy Baldwinand RepresentativesSean Casten,Jamaal Bowman,Pramila JayapalandBill Fostersent a letter to Secretary Raimondo urging her to detail how the Commerce Department would enforce the law's provisions preventing companies from using CHIPS Act money directly on stock buybacks (they noted the law does not prevent recipients from using the money to free up their own funds for stock buybacks), as well as whether the department would claw back misused funds and resolve conflicts of interest.[141]On February 10, 2023, they and Senators Bernie Sanders andEd Markeyrepeated many of the same points to Michael Schmidt, head of the Department's CHIPS Program Office, and urged even stronger action, outlining what regulatory crackdowns the law authorizes the department to do.[142]

In January 2024, Warren and Jayapal wrote to Secretary Raimondo, Schmidt, and CHIPS Program Office investment head Todd Fisher expressing their concerns over who was staffing the main funds allocator, which reporting fromThe Wall Street JournalandBloomberg Newsthe previous summer and fall had found to be a small collection of elite bankers, consultants and lobbyists from Wall Street firms with potential conflicts of interest.[143][144][145]

At the timeBAE Systemswas announced to be receiving a CHIPS Act grant, Warren and Casten wrote to CEO Tom Arsenault that they wanted BAE Systems to conform with the spirit of the Act, noting that BAE had engaged in $9.4 billion in stock buybacks the previous year.[146]Journalist Les Leopold later cited the letter andChris Van Hollen's statements on the subject to denounce Intel's engagement in similar practices netting them nearly $153 billion since 1990 and their recent mass layoffs, following the $8.5 billion grant receipt announcement.[147]

Grant delays[edit]

As of January 2024only two small grants had been awarded, neither for production of the most advanced chips.[14]

One hurdle delaying the release of award monies is theNational Environmental Policy Act,which requires that projects receive federal approvals before any funds can be dispersed. A federal government analysis cited byThe Wall Street Journalfound that these approvals, from 2013 to 2018, have taken an average of 4.5 years to receive.[14]

In April 2024, Commerce Secretary Gina Raimondo told CNBC at Samsung's grant announcement on the Taylor fab site that she expected all CHIPS Act grant money to be awarded by the end of the year, with most of the remaining funding going to equipment suppliers,wafermakers, and chemical engineering firms.[148]

Shortage of skilled workers[edit]

The US lacks the workforce required for fulfilling fab projects, with one study estimating a need of 300,000 additional skilled workers just to complete ongoing fab projects, not including new projects. Comparatively, the number of US students pursuing relevant degrees has been stagnant for 30 years, while international students face difficulties in staying to work. Plants planned by both TSMC and Intel have reportedly been struggling to find qualified workers.[149][15]Even after completion, in the operational/manufacturing stage, 40% of the permanent new workers will need two-year technician degrees and 60% will need four-year engineering degrees or higher.[15]

In Arizona, local unions clashed with TSMC after it reported that fab construction in Arizona was running behind schedule due to "an insufficient amount of skilled workers" with the expertise needed to install specialized equipment. TSMC planned to send experienced Taiwanese technicians to train local workers, which local unions characterized as "a lack of respect for American workers". The Arizona Building and Construction Trades Council subsequently asked Congress to block visas for 500 Taiwanese workers. TSMC reported that due to issues with labor, its investment in the first Arizona fab is expected to be delayed into 2025, with the second fab delayed from 2026 to 2027.[15][150][85][87](A third fab intended for hosting the2 nm processwould be announced in April 2024, though construction would not start until 2028.)[100][101]In contrast, in February 2024 TSMC completed construction of its first fab in Japan, located in the Kumamoto region, in 20 months, by running 24-hour shifts, helped by the Japanese government and locals being welcoming to the influx of skilled Taiwanese workers needed for the project.[151]

Intel similarly experienced delays from labor issues, with its planned Ohio fab expected to be delayed into 2026 due to a lack of skilled workers, as well as delays in grant funding.[151]

Labor deals[edit]

On December 6, 2023, the Arizona Building Trades Council and TSMC announced a deal to ensure a union-run workforce development program, improvements to transparency, and increased communications with the company's Taiwanese management, would proceed at the Arizona site.[152]

Secure enclave issue[edit]

In March 2024,Bloomberg Newsreported that Intel was poised to receive $3.5 billion in theyear's federal budget(specifically the second 'minibus') as part of a "secure enclave" program which Intel claimed would help facilitate national security through carrying outUnited States Department of Defensecontracts with high levels of secrecy.[153][154]Citing interviews of Charles Wessner of theCenter for Strategic and International Studiesand key congressional aides, and a risk assessment report from theUnited States Department of the Air Force,Austin Ahlman of the antitrust think tank Open Markets Institute criticized the plan, not least because it would take up more than 10 percent of the $39 billion in grants the Act designates for domestic semiconductors, as well as increase concentration in the domestic semiconductor industry.[154][155]GlobalFoundriesexecutives also criticized the plan. The DoD later withdrew its $2.5 billion contribution to the secure enclave plan and gave it to the Commerce Department.[155]

See also[edit]

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External links[edit]

  • Chips and Science Act bill:
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