Dreamstime Images
Dreamstime L 30510839

American Chip Manufacturing Gets a $52 Billion Infusion

Aug. 1, 2022
The CHIPS Act of 2022 includes about $52 billion in funding for U.S. companies that produce, design and research computer chips.

Download this article in PDF format.

A bipartisan bill that will help bolster American manufacture and design of semiconductors, the CHIPS Act of 2022 has been passed by both the Senate and the House and will soon be heading to President Biden to be signed into law.

Also known as “CHIPS-plus,” the “Creating Helpful Incentives to Produce Semiconductors for America Act” includes about $52 billion in funding for U.S. companies producing computer chips and a provision that offers a tax credit for investment in chip manufacturing, according to CNBC.

The act also provides funding to spur the innovation and development of other U.S. technologies, the publication adds, noting that CHIPS-plus is a narrower version of broader legislation that the House and Senate have been debating for months. 

According to the Senate Commerce Committee, the act requires the funding to be allocated over five years for a “CHIPS for America Fund.” The money must be used to implement the Commerce Department semiconductor incentive—to develop domestic manufacturing capability—and research and development (R&D) and authorized workforce development programs.

Proponents of the legislation say it’s vital for U.S. economic and national security interests in a world increasingly dependent on technological advancement. “They also argue the bill could help counteract the effects of a Covid-induced global chip shortage,” CNBC reports, “and put the US on a more competitive footing with China, which has invested heavily in its own chip-making capabilities.”

All in Favor Say “Aye”

The Semiconductor Industry Association (SIA) is one industry group that’s been all in favor of the CHIPS act and eagerly anticipated its approval as the bill made its way through the various required hoops. It urged swift passage of the act, which it feels will strengthen domestic semiconductor manufacturing, design and research, fortify the economy and national security, and reinforce America’s chip supply chains.

According to SIA, the share of modern semiconductor manufacturing capacity located in the U.S. is just 12% today compared to 37% in 1990. It blames the decrease on the fact that other countries’ governments have invested more ambitiously in chip manufacturing incentives. “Meanwhile, federal investments in chip research have held flat as a share of gross domestic product (GDP),” SIA points out, “while other countries have significantly ramped up research investments.”

To address these challenges, SIA urged full funding of the semiconductor manufacturing and research provisions in the CHIPS Act—and the enactment of an investment tax credit for semiconductor manufacturing and design—as a way to strengthen America’s global leadership in chip technology for years to come.

Powering Innovation

President Biden also advocated for the bill. “America invented the semiconductor. It’s time to bring it home,” he said at a recent White House meeting, as reported by CNBC. “The legislation is going to advance our nation’s competitiveness and our technological edge.”

The legislation also authorizes roughly $100 billion in spending over five years on scientific research, including more than $80 billion for the National Science Foundation, NPR reports.

"Chips alone are not going to be sufficient to preserve U.S. technology leadership,” National Security Adviser Jake Sullivan said during the White House roundtable, NPR notes, “which is why we need the rest of the innovation bill so that we invest not just in the core technology powering innovation today, but also the technologies that will power innovation tomorrow."

Voice your opinion!

To join the conversation, and become an exclusive member of Supply Chain Connect, create an account today!

About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.