Passed the Senate as the Chips and Science Act on July 27, 2022(64–33) with amendment
House agreed to Senate amendment on July 28, 2022(243–187–1)
Signed into law by President Joe Biden on August 9, 2022
The CHIPS and Science Act is a U.S. federal statute enacted by the 117th United States Congress and signed into law by President Joe Biden on August 9, 2022. The act authorizes roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States, for which it appropriates $52.7 billion.[1][2][3] The act includes $39billion in subsidies for chip manufacturing on U.S. soil along with 25% investment tax credits for costs of manufacturing equipment, and $13billion for semiconductor research and workforce training, with the dual aim of strengthening American supply chain resilience and countering China.[4][5]:1 It also invests $174 billion in the overall ecosystem of public sector research in science and technology, advancing human spaceflight, quantum computing, materials science, biotechnology, experimental physics, research security, social and ethical considerations, workforce development and diversity, equity, and inclusion efforts at NASA, NSF, DOE, EDA, and NIST.[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 the CHIPS Act of 2022 (where CHIPS stands for "Creating Helpful Incentives to Produce Semiconductors"); Division B is the Research and Development, Competition, and Innovation Act; and Division C is the Supreme 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
The CHIPS and Science Act combines two bipartisan bills: the Endless Frontier Act,[18] designed to boost investment in domestic high-tech research, and the CHIPS for America Act,[19] designed to bring semiconductor manufacturing back to the U.S. The act is aimed at competing with China.[20]
The Endless Frontier Act was initially presented to Senators Chuck Schumer (D-NY) and Todd Young (R-IN) by Under Secretary of StateKeith Krach in 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 $150billion in government R&D funding into a $500billion 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 Congressmen Ro Khanna (D-CA) and Mike Gallagher (R-WI.), introduced the bipartisan, bicameral Endless Frontier Act to 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]
The United States Innovation and Competition Act of 2021 (USICA) (S. 1260), formerly known as the Endless Frontier Act, was United States legislation sponsored by Senate Majority Leader Chuck Schumer and Senator Young authorizing $110billion for basic and advanced technology research over a five-year period. Investment in basic and advanced research, commercialization, and education and training programs in artificial intelligence, semiconductors, quantum computing, advanced communications, biotechnology and advanced energy, amounts to $100billion. Over $10billion was authorized for appropriation to designate ten regional technology hubs and create a supply chain crisis-response program.[25]
The CHIPS for America Act portion stemmed from Under Secretary of State Krach and his team brokering the $12billion on-shoring of TSMC (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 the TSMC announcement 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 Senators John Cornyn (R-TX) and Mark Warner (D-VA).[30] In June 2020, Senator Warner joined U.S. Senator John Cornyn in introducing the $52billion CHIPS for America Act.[31]
Both bills were eventually merged into the U.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 bipartisan CHIPS and Science Act, or "CHIPS Plus".[32] The bill passed the U.S. Senate by a vote of 64–33 on July 27, 2022.[33] On July 28, the $280 billion bill passed the U.S. House by a vote of 243–187–1.[34] On August 1, 2022, the magazine EE Times (Electronic Engineering) dubbed Under Secretary of State Keith Krach (as of February2023[update], now the current Chairman of the Krach Institute for Tech Diplomacy at Purdue University) the architect of the CHIPS and Science Act.[29] The bill was signed into law by President Joe Biden on August 9, 2022.[35]
The law constitutes an industrial policy initiative which takes place against the background of a perceived AI Cold War between the US and China, as artificial intelligence technology relies on semiconductors.[36] The law was considered amidst a global semiconductor shortage and intended to provide subsidies and tax credits to chip makers with operations in the United States. The U.S. Department of Commerce was 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 $106billion. The CHIPS Act includes $39billion 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, $11billion would go toward advanced semiconductor research and development, separable into $8.5billion of that total going to the National Institute for Standards and Technology, $500million to Manufacturing USA, and $2billion to a new public research hub called the National Semiconductor Technology Center. $24billion would go to a new 25 percent advanced semiconductor manufacturing tax credit to encourage firms to stay in the United States, and $200million would go to the National Science Foundation to resolve short-term labor supply issues.[6][39]
According to McKinsey, "The CHIPS Act allocates $2 billion to the Department of Defense to fund microelectronics research, fabrication, and workforce training. An additional $500 million goes to the Department of State to 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 open RAN5G networks."[6][39] (The open RAN research innovation fund is controlled by the National Telecommunications and Information Administration.)[40] Companies are subjected to a ten-year ban prohibiting them from producing chips more advanced than 28 nanometers in China and Russia if they are awarded subsidies under the law.[41]
The law could potentially invest $67billion in accelerating advanced zero-emissions technologies (such as improved energy storage, hydrogen economy technologies, and carbon capture and storage) to mass markets, advancing building efficiency, and improving climate science research, according to the climate action think tank Rocky Mountain Institute. The law would invest $81billion in the NSF, including new money for STEM education (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 foreign intellectual property infringement, and $20billion 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 $12billion for ARPA-E.[8][11] For the United States Department of Energy the law creates a new 501(c)(3) organization, the Foundation for Energy Security and Innovation, to leverage philanthropy for improving the workforce and bolstering energy research.[43] It contains annual DOE budget increases for other purposes including supercomputer, nuclear fusion and particle accelerator research as well as minority-serving institution outreach and workforce development for teachers, and directs the DOC to establish $10billion worth of research hubs in post-industrial rural and urban communities that have been subjected to historical underinvestment.[6][9][7][44]
As a national security law, the law contains a variety of provisions related to research ethics, foreign talent recruitment, restrictions on Confucius Institutes, and establishing new research security initiatives in the DOE, NIST, and the NSF.[45]
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 of public participatory technology assessment; the law does not invoke 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 the Eddie Bernice Johnson INCLUDES Network to serve as the NSF's main diversity, equity, and inclusion program. 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 does not invest in the United States Department of Labor to carry this out.[44][9]
Passage
President Joe Biden signing the bill into law on the South Lawn of the White House on August 9, 2022July 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
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's Tom Wolf, Alabama's Kay Ivey, California's Gavin Newsom, Kentucky's Andy Beshear, Michigan's Gretchen Whitmer, Wisconsin's Tony Evers, Illinois' J. B. Pritzker, Kansas' Laura Kelly, and North Carolina's Roy Cooper pushed for the passage of the bill back in November 2021.[46][47]
Separately, Ohio governor Mike DeWine, whose state became the home of Intel's newest semiconductor fabrication plant in the Columbus suburb of New Albany, as well as Texas governor Greg Abbott and Texas senator John Cornyn, whose state was the home of a major investment from Samsung, each pushed for the bill to be passed and applauded its advancement through Congress.[48][49][50] It has received widespread support from chip firms, though they were concerned about the provision banning them from further investments in China.[51][52]
Intel CEO Pat Gelsinger said 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.[53][54]
Opposition
The bill was criticized by Republican House leader Kevin McCarthy and senator Bernie Sanders as a "blank check", which the latter equated to a bribe to semiconductor companies.[33][55][56] China lobbied against the bill and criticized it as being "reminiscent of a 'Cold War mentality'".[57]
Concerns of protectionism
In a piece for the Brookings Institution on December 20, 2022, Sarah Kreps and Paul Timmers expressed concerns regarding the protectionist provisions of the CHIPS and Science Act and the risk of a subsidy race with the EU, which proposed its own European Chips Act in 2022.[58]
Concerns of poor workforce development
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.[59] 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.[44]
Environmental concerns
Writing in the Substack climate and finance newsletter The Gigaton, Stanford MBA students Georgia Carroll and Zac Maslia criticized the Act for lacking incentives to add renewable energy to chipmakers' base loads, and reclaimed water and PFAS alternatives 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.[60]
Concerns of inaction on unions, stock buybacks
Robert Kuttner, economic nationalist commentator and editor of The American Prospect, expressed concerns that the bill did not provide enough resources to allow local residents near fabs to organize or form a trade union (thereby making unions rely too heavily on community benefits agreements compared to federal policy), that the Commerce Department would be too friendly to states with right-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 to buy back stocks.[61] In response to these concerns, on February 28, 2023, United States Secretary of CommerceGina Raimondo published the first application for CHIPS Act grants, which encourages fab operators to use Project Labor Agreements for facilitating union negotiations during construction, outline their plans to curtail stock buybacks, share excess profits with the federal government, and open or point out nearby child care facilities.[62][54][63] 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;[64][65] by June 2023, the number had reached over 300.[66] The Prospect later covered the lack of progress in PLA talks between key investor TSMC and local unions in Phoenix, and included both author Lee Harris's claim that the Raimondo guidance was insufficient in helping the talks, and liberal commentator Ezra Klein's criticism of the Raimondo guidance as excessive.[67] 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.[63]
Antitrust concerns
In February 2024, the antitrust think tank American Economic Liberties Project released 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 effective monopolization and monopsony of the American semiconductor industry by TSMC and by 'fabless' semiconductor firms that practiced routine outsourcing, such as Nvidia and Apple 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 the Federal Trade Commission and other antitrust agencies in its decision-making, incubate four mid-size competitors to TSMC, require 'fabless' firms to double their source numbers, and strategically levy tariffs and fees on select consumer electronics deemed lacking in American sourcing.[68]
Impact
President Biden taking a selfie with construction workers at a TSMC plant in Arizona, December 2022
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.[69] 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]
On the second anniversary of the Act becoming law, the NSF put out an updated fact sheet. The TIP Directorate had now awarded a two-year total of 2,455 grants and signed 25 contracts in research and development, and incentivized $8.15 billion in private capital and more than 75 exits from federal seed funding; the NSF also designated 10 new Regional Innovation Engines in January 2024, issued the first 40 awards in the ExLENT program promoting experiential learning in semiconductor engineering at universities, launched the NSF SBIR/SBTT Fast-Track pilot program for certain startups and the APTO program promoting technology prediction, and signed a memorandum of understanding with the Commerce Department for further action in workforce development.[70]
In September 2024, the National Academies of Sciences, Engineering, and Medicine produced a report on NASA's organizational efficiency mandated by the law,[71] which found several critical weaknesses, namely, in long-term planning, workforce retention, headquarters staffing levels, budgetary support from Congress, aging infrastructure, and emphasis on research and development as part of instrument planning.[72]
Project announcements
Many companies and ecosystem suppliers have announced investment plans since May 2020, when TSMC announced that it would build a fab in Arizona,[73][29][13][74] which upon completion began producing Apple A16 chips in earnest in mid-September 2024, according to independent journalist Tim Culpan,[75] achieving 4 percent higher production yields than the average in Taiwan by late October.[76]
These include (before the act passed on August 9, 2022):
In July 2021, GlobalFoundries announced plans to build a new $1billion fab in Upstate New York.[77]
In November 2021, Samsung announced plans to build a $17billion semiconductor factory to begin operations in the second half of 2024. It is the largest foreign direct investment ever in the state of Texas.[78]
In January 2022, Intel announced an initial $20billion investment that will generate 3,000 jobs, the largest investment in Ohio's history, with plans to grow to $100billion investment in eight fabrication plants.[79]
In May 2022, Purdue University launched 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.[80][81]
In May 2022, Texas Instruments broke ground on new 300-mm semiconductor wafer fabrication plants in Sherman, Texas, and projected its investments will reach $30billion and create as many as 3,000 jobs.[82]
In July 2022, SkyWater announced plans to build an advanced $1.8billion semiconductor manufacturing facility with the government of Indiana and Purdue University to pursue CHIPS funding.[83][84]
After the act passed:
In September 2022, Wolfspeed announced it will build the world's largest silicon carbide semiconductor plant in Chatham 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.[85]
In October 2022, Micron Technology announced it will invest $20billion in a new chip factory in Clay, New York, to take advantages of the subsidies in the Act and signaled it could expand its investments to $100billion over 20 years.[1][86][87] The state of New York granted the company $5.5billion in tax credits as an incentive to move there, if it meets employment promises.[86]
In December 2022, TSMC announced the opening of the company's second chip plant in Arizona, raising its investments in the state from $12billion to $40billion.[88] 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.[89][90] 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[63] such as withholding necessary skills training;[91] 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,[92] 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.[93]
In February 2023, Integra Technologies announced a $1.8 billion proposal for expanding their Outsourced Semiconductor Assembly and Test (OSAT) operation in Wichita, Kansas.[95]
In February 2023, EMP Shield announced a $1.9 billion proposal for a new campus in Burlington, Kansas.[96]
In April 2023, Bosch announced it was acquiring TSI Semiconductors and investing $1.5 billion in upgrades geared toward making silicon carbide chips at the TSI plant in Roseville, California.[97]
In June 2023, the French company Mersen, a subsidiary of Le Carbone Lorraine, announced it would spend $81 million on an expansion project in Bay City and Greenville, Michigan due to Michigan's state implementation of the CHIPS Act.[citation needed]
The following projects were announced after the Act's first anniversary:
In November 2023, Amkor Technology announced they would apply for CHIPS Act funding to build a $2 billion chip packaging and testing facility in Peoria, Arizona, motivated by their work with Apple and TSMC.[98]
In December 2023, BAE Systems announced they had received $35 million in national security-related grants from the Act to upgrade their Nashua, New Hampshire plant.[99][100]
In April 2024, TSMC announced they had received $6.6 billion to build a third fab in Arizona, with the intent to host the 2 nm process, and construction slated to begin in 2028.[105][106] The grant was finalized on November 15.[107]
In April 2024, Samsung announced they had received $6.4 billion in grants from the Act to invest in additional capacity at its new Texas factory site, which had been revealed to be located in Taylor, and at their existing factory in nearby Austin.[108]
In April 2024, Micron Technologies announced a federal CHIPS and Science Act grant of $6.1 billion toward building a new semiconductor chip manufacturing campus in Clay, New York, a northern suburb of Syracuse in Upstate New York, along with a new leading-edge fab in Boise, Idaho; it also announced it would progress its worldwide investments by $100 billion.[109][110]
In May 2024, the Biden administration and Polar Semiconductor agreed to establish a new foundry creating 160 new jobs in Bloomington, Minnesota using $120 million in CHIPS Act funding.[111]
In May 2024, the administration and SK Group subsidiary Absolics announced an agreement to build glass wafers in a new factory creating 1,200 new jobs in Covington, Georgia using $75 million in CHIPS Act money.[112]
On May 13, 2024, Bloomberg News found a total of $32.8 billion had been allocated from the CaSA's $39 billion fund, with federal loans and tax credits set to reach $75 billion. Boston Consulting Group and the Semiconductor Industry Association estimated that by 2033, the United States would attain 28 percent of the world's market for advanced logic chips, and its share of the world's fabs would grow to 14 percent of the total (compared to a baseline scenario of 8 percent if the Act had not passed).[114]
Tech Hubs
On October 23, 2023, the Biden administration announced that it directed the Economic Development Administration to focus on 31 areas (across 32 states and Puerto 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.[115][116][117]
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.[118]
Macroeconomic impact
Estimates of the results of the CHIPS Act vary. The trade group Semiconductor 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.[74] 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 November14,2024[update]; when considered together with Inflation Reduction Act investments, the total comes out to 218 projects worth $388 billion creating 135,800 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][119][120][65][121]
In December 2023, the Financial Times found the IRA and CaSA together catalyzed over $224 billion in investments and over 100,000 new jobs by the preceding July.[122]
According to the New Democrat-linked think tank Center for American Progress, the CHIPS and Science Act, the Inflation Reduction Act, and the Infrastructure Investment and Jobs Act have together led to more than 35,000 public and private investments.[123] The Biden administration itself claimed that as of November15,2024[update], the IIJA, CaSA, and IRA together catalyzed over $988 billion in private investment (including $446 billion in electronics and semiconductors, $180 billion in electric vehicles and batteries, $184 billion in clean power, $84 billion in clean energy tech manufacturing and infrastructure, and $48 billion in heavy industry) and over $696.3 billion in public infrastructure spending (including $96.8 billion in energy aside from tax credits in the IRA).[124]
California
Manufacturing
In California, where the semiconductor industry was founded in Silicon 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
In May 2023, Applied Materials announced 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 in Sunnyvale, 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.[125][126][66]
Implementation
Underfunding of research agencies
In June 2023, after the passage of the debt-ceiling deal, Federation of American Scientists analysts Matt Hourihan and Melissa Roberts Chapman and Brookings Institution analyst Mark Muro noted that the Consolidated Appropriations Act, 2023 had 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 the 2024 United States federal budget would 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, Politico contributor 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 the Economic 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][127] As of April 2024, CHIPS research agencies have been underfunded by over $8 billion.[128]
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.[129][130]
National Semiconductor Technology Center
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 nonprofit public–private partnership within NIST called Natcast in April 2023,[131] putting out a call for volunteers to select who will serve as board members.[132] In June, the selection committee was announced as Janet Foutty of Deloitte, John L. Hennessy of Alphabet, Jason Gaverick Matheny of RAND Corporation, Don Rosenberg of the University of California, San Diego, and Brenda Darden Wilkerson of AnitaB.org.[133] In September, the selection committee's activities were closed.[134] By the White House's announcement date, the board of trustees was finalized as Robin Abrams of Analog Devices Inc., Craig Barrett of Intel, Reggie Brothers of the MIT Lincoln Lab, Nick Donofrio of IBM, Donna Dubinsky of Palm and Handspring, and Erica Fuchs of Carnegie Mellon University.[135] They selected Deirdre Hanford of Synopsys to serve as Natcast's CEO.[135]As of October24,2024[update], Natcast was promised at least $5 billion from the Biden administration, and has established a Workforce Center of Excellence and "Community of Interest",[136] beginning its first $100 million grant competition in the summer, with a focus on improving artificial intelligence and making cutting-edge research cheaper.[137] It has prepared its strategic plan for fiscal years 2025-27, outlining goals that range from scaling up multi-process wafer access to computer-aided design of chips to organizing the Workforce Center of Excellence.[138]
Arrian Ebrahaimi and Jordan Schneider, writing for the Institute 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 company IMEC.[143]
Metrology, packaging and digital twins initiatives
The Biden administration will also invest at least $200 million[136] in a new Manufacturing USA Institute under the Act, focused on spreading the use of digital twins in semiconductor design,[144] and $300 million[136] in the NIST Advanced Packaging Manufacturing Program, focused on researching new substrate chemistries for semiconductor packaging.[145] The Commerce Department also awarded $100 million to 29 research projects in advanced metrology by February,[136] and released a new notice of opportunity for metrology research funding on April 16.[146]
Rule on business deals with countries of concern
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.[147][148]
Stock buybacks and economic equality
In October 2022, Senators Elizabeth Warren and Tammy Baldwin and Representatives Sean Casten, Jamaal Bowman, Pramila Jayapal and Bill Foster sent 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.[149] On February 10, 2023, they and Senators Bernie Sanders and Ed Markey repeated 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.[150]
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 from The Wall Street Journal and Bloomberg News the 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.[151][152][153]
At the time BAE Systems was 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.[154] Journalist Les Leopold later cited the letter and Chris 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.[155]
Grant delays
As of January 2024[update] only two small grants had been awarded, neither for production of the most advanced chips.[14]
One hurdle delaying the release of award monies is the National Environmental Policy Act, which requires that projects receive federal approvals before any funds can be dispersed. A federal government analysis cited by The Wall Street Journal found 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, wafer makers, and chemical engineering firms.[156] However, by mid-November 2024, only Polar Semiconductor and TSMC's grant deals had been finalized by the Biden administration.[107] This changed by the end of the month, as the Biden administration finalized its fifth and sixth grant agreements, with GlobalFoundries for its New York and Vermont projects, and with Intel for its Arizona, New Mexico, Ohio, and Oregon projects.[157][158]
Shortage of skilled workers
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.[159][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][160][91][93] (A third fab intended for hosting the 2 nm process would be announced in April 2024, though construction would not start until 2028.)[105][106] 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.[161]
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.[161]
Labor relations results
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.[162]
In August 2024, the Prospect reported on several effects of the CaSA on unionization, neutrality on which the CaSA does not require of grant recipients; more specifically, it covered Secretary Raimondo's lack of enforcement of the Commerce Department's Good Jobs Principles. Workers at an Analog Devices, Inc. fab in Beaverton, Oregon protested unsafe working conditions the previous June, and are lobbying Oregon state legislators to add unionization neutrality provisions to their state-level version of the Act. Microchip Technology Vice President Dan Malinaric was recorded in July as pressuring workers to not form a union, a violation of the Wagner Act. The Communications Workers of America union was only able to reach community benefits agreements with a select few firms benefiting from the Act, including Akash Systems.[163]
Secure enclave issue
In March 2024, Bloomberg News reported that Intel was poised to receive $3.5 billion from the CaSA in the year's federal budget (specifically the second 'minibus') as part of a "secure enclave" program which Intel claimed would help facilitate national security through carrying out United States Department of Defense contracts with high levels of secrecy.[164][165] Citing interviews of Charles Wessner of the Center for Strategic and International Studies and key congressional aides, and a risk assessment report from the United 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.[165][166]GlobalFoundries executives 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,[166] which allowed Intel to finalize the funding agreement on September 16, 2024,[167] amid concerns of its shaky financial performance and lagging customer outreach.[168][169][170][171] The funding agreement resulted in a reduction of Intel's later grant from an announced $8.5 billion to $7.86 billion in November.[158]
International collaboration
State Department funds
The State Department has awarded $200 million in partnerships to academia and foreign companies as of July2024[update] under the Act's International Technology Security and Innovation Fund. The State Department has partnered with the governments of Costa Rica, Panama, Vietnam, Indonesia, the Philippines and Mexico to distribute these funds, for technology incubation purposes.[172]
India-US defense fab partnership
In order to manufacture chips for national security needs, the US military has partnered with Indian startups to establish a semiconductor fabrication plant in India. With assistance from the India Semiconductor Mission and a strategic technology cooperation between the United States Space Force (USSF), Bharat Semi, and 3rdiTech, the fabrication plant would produce silicon carbide, infrared, and gallium nitride chips. The plant will prioritize supplying the high-voltage power electronics, advanced communications, and advanced sensors that are the three fundamental foundations of modern warfare. The chips will also be utilized in data centers, communications infrastructure, green energy systems, and railroads. It will support the development of a reliable and robust supply chain in the crucial area of national security.[173]
To address the defense demands of the United States and its allies, the Shakti Semiconductor Fab will acquire complete expertise in the development of compound semiconductors. The factory will begin phase one production in 2027, with an annual target of 50,000 units. The establishment of the facility would cost $500 million in investments. General Atomics is 3rdiTech's technology validation partner.[177] The company has worked under the DoD and the Ministry of Defence in the United Kingdom.[178]
Designed for national security, the fabrication plant is the first multi-material fabrication facility in the world.[179] On September 21, 2024, at a bilateral meeting between PresidentJoe Biden and Prime MinisterNarendra Modi in Delaware, the blueprint for the Bharat Semi Fab was revealed. The strategic significance of this project is further enhanced by the fact that it represents the US Space Force's first-ever international technology partnership.[180]
Follow-up environmental bill
On July 11, 2023, after complaints from semiconductor lobbyists on CHIPS Act-related permitting issues, Senators Mark Kelly, Sherrod Brown, Todd Young, Ted Cruz, and Bill Hagerty introduced the Building Chips in America Act, which would designate the Commerce Department the lead agency for major fab projects, limit the scope of NEPA reviews for certain fab projects, and cut judicial review times for them.[181] The Senate passed the bill once on July 28, 2023[182] and again in December 2023. The House passed the companion bill on September 23, 2024, with a vote of 275–125. Amid protests from Zoe Lofgren, the Sierra Club, Center for Biological Diversity, CHIPS Communities United, and two dozen other environmental groups,[183] President Biden signed the bill into law on October 2.[184][185][186]
Taiwan Semiconductor Manufacturing Company Limited is a Taiwanese multinational semiconductor contract manufacturing and design company. It is the world's most valuable semiconductor company, the world's largest dedicated independent ("pure-play") semiconductor foundry, and its country's largest company, with headquarters and main operations located in the Hsinchu Science Park in Hsinchu, Taiwan. Although the central government of Taiwan is the largest individual shareholder, the majority of TSMC is owned by foreign investors. In 2023, the company was ranked 44th in the Forbes Global 2000. Taiwan's exports of integrated circuits amounted to $184 billion in 2022, accounted for nearly 25 percent of Taiwan's GDP. TSMC constitutes about 30 percent of the Taiwan Stock Exchange's main index.
Micron Technology, Inc. is an American producer of computer memory and computer data storage including dynamic random-access memory, flash memory, and solid-state drives (SSDs). It is headquartered in Boise, Idaho. Micron's consumer products, including the Ballistix line of memory modules, are marketed under the Crucial brand. Micron and Intel together created IM Flash Technologies, which produced NAND flash memory. It owned Lexar between 2006 and 2017. Micron is the only U.S.-based manufacturer of memory.
The semiconductor industry is the aggregate of companies engaged in the design and fabrication of semiconductors and semiconductor devices, such as transistors and integrated circuits. It formed around 1960, once the fabrication of semiconductor devices became a viable business. The industry's annual semiconductor sales revenue has since grown to over $481 billion, as of 2018.
Intel Ireland is the Irish subsidiary of the U.S.-based semiconductor giant, Intel. Founded in 1989, the company is one of the largest employers in Ireland.
Semiconductor Manufacturing International Corporation (SMIC) is a partially state-owned publicly listed Chinese pure-play semiconductor foundry company. It is the largest contract chip maker in mainland China.
ASML Holding N.V. is a Dutch multinational corporation founded in 1984. ASML specializes in the development and manufacturing of photolithography machines which are used to produce computer chips.
The transistor count is the number of transistors in an electronic device. It is the most common measure of integrated circuit complexity. The rate at which MOS transistor counts have increased generally follows Moore's law, which observes that transistor count doubles approximately every two years. However, being directly proportional to the area of a die, transistor count does not represent how advanced the corresponding manufacturing technology is. A better indication of this is transistor density which is the ratio of a semiconductor's transistor count to its die area.
Patrick Paul Gelsinger is an American business executive and engineer, who has been the CEO of Intel since February 2021.
GlobalFoundries Inc. is a multinational semiconductor contract manufacturing and design company incorporated in the Cayman Islands and headquartered in Malta, New York. Created by the divestiture of the manufacturing arm of AMD, the company was privately owned by Mubadala Investment Company, a sovereign wealth fund of the United Arab Emirates, until an initial public offering (IPO) in October 2021.
In semiconductor manufacturing, the "7 nm" process is a term for the MOSFET technology node following the "10 nm" node, defined by the International Roadmap for Devices and Systems (IRDS), which was preceded by the International Technology Roadmap for Semiconductors (ITRS). It is based on FinFET technology, a type of multi-gate MOSFET technology.
In the early twenty-first century; foreign investment, government regulations and incentives promoted growth in the Indian electronics industry. The semiconductor industry, which is its most important and resource-intensive sector, profited from the rapid growth in domestic demand. Many industries, including telecommunications, information technology, automotive, engineering, medical electronics, electricity and solar photovoltaic, defense and aerospace, consumer electronics, and appliances, required semiconductors. However, as of 2015, progress was threatened by the talent gap in the Indian sector, since 65 to 70 percent of the market was dependent on imports.
In semiconductor manufacturing, the 3nm process is the next die shrink after the 5 nm MOSFET technology node. South Korean chipmaker Samsung started shipping its 3 nm gate all around (GAA) process, named 3GAA, in mid-2022. On 29 December 2022, Taiwanese chip manufacturer TSMC announced that volume production using its 3 nm semiconductor node (N3) was underway with good yields. An enhanced 3 nm chip process called "N3E" may have started production in 2023. American manufacturer Intel planned to start 3 nm production in 2023.
In semiconductor manufacturing, the 2 nm process is the next MOSFET die shrink after the 3 nm process node.
The semiconductor industry, including Integrated Circuit (IC) manufacturing, design, and packaging, forms a major part of Taiwan's IT industry. Due to its strong capabilities in OEM wafer manufacturing and a complete industry supply chain, Taiwan has been able to distinguish itself as a leading microchip manufacturer and dominate the global marketplace. Taiwan’s semiconductor sector accounted for US$115 billion, around 20 percent of the global semiconductor industry. In sectors such as foundry operations, Taiwanese companies account for 50 percent of the world market, with Taiwan Semiconductor Manufacturing Company (TSMC) the biggest player in the foundry market.
Between 2020 and 2023, there was a worldwide chip shortage affecting more than 169 industries, which led to major price increases, long queues, and reselling among consumers and manufacturers for automobiles, graphics cards, video game consoles, computers, household appliances, and other consumer electronics that require integrated circuits.
The Artificial Intelligence Cold War (AI Cold War) is a narrative in which geopolitical tensions between the United States of America (USA), the Russian Federation, and the People's Republic of China (PRC) lead to a Second Cold War waged in the area of artificial intelligence technology rather than in the areas of nuclear capabilities or ideology. The context of the AI Cold War narrative is the AI arms race, which involves a build-up of military capabilities using AI technology by the US and China and the usage of increasingly advanced semiconductors which power those capabilities.
The Chinese semiconductor industry, including integrated circuit design and manufacturing, forms a major part of mainland China's information technology industry.
Rapidus Corporation is a semiconductor manufacturer headquartered in Chiyoda, Tokyo, Japan. Rapidus was established in August 2022 with the support of eight major Japanese companies: Denso, Kioxia, MUFG Bank, NEC, NTT, SoftBank, Sony, and Toyota. The goal of Rapidus is to increase advanced semiconductor manufacturing capacity with a 2 nm process by 2027.
The National Semiconductor Technology Center (NSTC) is a research institution operated by Natcast. It is a consortium comprising governments, industries, and academic institutions.
References
1 2 3 Johnson, Lamar (August 9, 2022). "Biden ends slog on semiconductor bill with signature". POLITICO. Archived from the original on August 21, 2022. Retrieved August 9, 2022. Biden said Micron, an American-based company, announced a 10-year, $40 billion investment on Tuesday for factories and building memory chips as a result of the law. He also touted a Monday announcement by American companies Qualcomm and GlobalFoundries to invest $4 billion to produce semiconductors in the United States.
1 2 3 4 5 Badlam, Justin; Clark, Stephen; Gajendragakar, Suhrid; Kumar, Adi; O'Rourke, Sara; Swartz, Dale (October 4, 2022). "The CHIPS and Science Act: Here's what's in it". McKinsey & Company. Archived from the original on October 5, 2022. Retrieved October 5, 2022.
1 2 3 4 Hayashi, Yuka; Jie, Yang (August 24, 2023). "Arizona Labor Spat Signals Challenges for U.S. Chip Manufacturing". Wall Street Journal. Industry executives and economists say a shortage of chip-industry workers in the U.S. is a big hurdle as the U.S. seeks to entice Asian chip makers that dominate global semiconductor supplies, and who enjoy deep pools of skilled workers and lower production costs at home.
1 2 Kersten, Alexander; Athanasia, Gabrielle; Arcuri, Gregory (August 9, 2022). "A Look at the CHIPS-Related Portions of CHIPS+". Center for Strategic and International Studies. Archived from the original on October 5, 2022. Retrieved October 5, 2022.
↑ Kuttner, Robert (January 24, 2023). "Reclaiming U.S. Industry". The American Prospect. Archived from the original on February 3, 2023. Retrieved February 22, 2023.
↑ Committee on NASA Mission Critical Workforce, Infrastructure, and Technology; Aeronautics and Space Engineering Board; Space Studies Board; Division on Engineering and Physical Sciences; National Academies of Sciences, Engineering, and Medicine (2024). NASA at a Crossroads: Maintaining Workforce, Infrastructure, and Technology Preeminence in the Coming Decades. Washington, D.C.: National Academies Press. doi:10.17226/27519. ISBN978-0-309-71631-4.{{cite book}}: CS1 maint: multiple names: authors list (link)
↑ "Governor Kelly Announces EMP Shield Plans to Build $1.9 Billion, 1,200-Job Computer Chip Manufacturing Facility in Coffey County". Kansas Department of Commerce. February 20, 2023. Archived from the original on March 9, 2023. Retrieved March 9, 2023. EMP Shield will leverage state support to apply for CHIPS Act funding to see its plans to fruition. The project came together shortly after the CHIPS Act was signed into law last August. Additional stipulations include private-public partnerships as well as the involvement of higher education institutions.
↑ Ebrahimi, Arrian; Schneider, Jordan; Hwang, Tim; Watney, Caleb; Richards, Adin (April 22, 2024). "How to Make the NSTC a Moonshot Success". Institute for Progress. Retrieved May 1, 2024.
↑ Huang, Elaine (November 11, 2023). "TSMC in Arizona: Who wins in dispute with labor union?". CommonWealth Magazine. With an investment of US$40 billion the Arizona fab is the biggest investment that TMSC has undertaken to date, and the highest investment ever made by a foreign company in the United States.
1 2 Sants, Arthur (March 5, 2024). "What TSMC's new plant tells us about Intel and the US's ambitions". Investors' Chronicle. Usually, it takes around three years to build such a plant. The Kumamoto project was completed in just 20 months. Semiconductor industry analyst Kevin Xu explained this was done by working seven days a week and running 24-hour non-stop shifts. ... In Japan, rather than unions resisting experienced Taiwanese workers moving to the country, they made them feel as welcome as possible, according to Xu: he said supermarkets even started stocking Taiwanese food, while an international school started hiring more Taiwanese teachers.
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