The CHIPS and Science Act: A Historic Investment in U.S. Semiconductor Industry

On August 9, 2022, President Joe Biden signed into law the CHIPS and Science Act, a bipartisan legislation that provides roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States. Semiconductors are tiny electronic devices that power everything from smartphones and computers to cars and airplanes. They are essential for the development and innovation of emerging technologies, such as artificial intelligence, quantum computing, biotechnology, nanotechnology, and clean energy.

The CHIPS and Science Act combines two previous bills: the Endless Frontier Act, designed to boost investment in domestic high-tech research, and the CHIPS for America Act, designed to bring semiconductor manufacturing back to the U.S2. The act is aimed at competing with China and strengthening America’s economic and national security at home and abroad.

The act will invest $39 billion over five years to expand domestic semiconductor manufacturing, provide a 25% tax credit for companies that invest in semiconductor equipment or facilities, and restrict private companies that receive financial assistance from expanding certain chip manufacturing in China for 10 years. The act will also provide $11 billion over five years to the Department of Commerce to help spur research and development in advanced semiconductor manufacturing, invest in new technologies and expand workforce training opportunities.

The act will also spend money on a variety of other initiatives, such as:

Creating a new Directorate of Technology and Innovation at the National Science Foundation to fund basic and applied research in key technology areas, such as artificial intelligence, quantum computing, biotechnology, nanotechnology, and clean energy.

Establishing regional technology hubs across the country to foster innovation ecosystems and support local economic development.

Authorizing funding for the Department of Energy’s Office of Science, ARPA-E, and other programs that support scientific discovery and energy innovation.

Enhancing U.S. leadership in international scientific collaborations and partnerships.

Supporting STEM education, research fellowships, scholarships, and mentoring programs to diversify and grow the U.S. scientific and technological workforce.

The CHIPS and Science Act is expected to have a significant impact on the U.S. semiconductor industry, which has been facing a global chip shortage due to surging demand, supply chain disruptions, trade tensions, and foreign competition. The U.S. invented the semiconductor, but today produces about 10% of the world’s supply—and none of the most advanced chips. Instead, it relies on East Asia for 75% of global production2. The act will unlock hundreds of billions more in private-sector semiconductor investment across the country, including production essential to national defense and critical sectors.

The act has received widespread support from various stakeholders, including industry groups, academic institutions, labor unions, state and local governments, national security experts, and bipartisan lawmakers. They have praised the act as a visionary and strategic investment that will revitalize American manufacturing, create good-paying jobs, strengthen American supply chains, and accelerate the industries of the future.

The CHIPS and Science Act is a landmark legislation that will poise U.S. workers, communities, and businesses to win the race for the 21st century. It will strengthen American manufacturing, supply chains, and national security, and invest in research and development, science and technology, and the workforce of the future to keep the United States the leader in the industries of tomorrow.