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 bythe 117th United States Congress
EffectiveAugust 9, 2022
Citations
Public lawPub. L. 117–167 (text) (PDF)
Statutes at Large136 Stat. 1366
Legislative history
  • Introduced in the House of Representatives as H.R. 4346 the Supreme Court Security Funding Act of 2022 by Tim Ryan (DOH) on July 1, 2021
  • Committee consideration by House Appropriations
  • Passed the House on July 28, 2021 (215–207)
  • 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 provides roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States.[1] The act channels more than $52 billion into researching semiconductors and other scientific research, with the primary aim of countering China. Chip suppliers have committed or made announcements totally over $300 billion in investments and jobs in anticipation of the passing of the act.

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.[2]

History[edit]

The CHIPS and Science Act combines two bipartisan bills: the Endless Frontier Act,[3] designed to boost investment in domestic high-tech research and the CHIPS for America Act,[4] designed to bring semiconductor manufacturing back to the U.S. The act is aimed at competing with China.[5]

The Endless Frontier Act was initially presented to Senators Chuck Schumer (D-NY) and Todd Young (R-IN) by Under Secretary of State Keith 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.[6][7] 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).[8][9] On May 27, 2020, Senators Young and Schumer, along with Congressmen Ro Khanna (D-Calif.) and Mike Gallagher (R-Wis.), 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.[10]

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 Senators Schumer and 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 in artificial intelligence, semiconductors, quantum computing, advanced communications, biotechnology and advanced energy, amounts to $100 billion. Over $10 billion was authorized for appropriation to designate ten regional technology hubs and create a supply chain crisis-response program.[11]

The CHIPS for America Act portion stemmed from Under Secretary of State Krach and his team brokering the $12 billion on-shoring of TSMC (Taiwan Semiconductor Manufacturing Company) to secure the supply chain of sophisticated semiconductors, on May 15, 2020.[12][13][14] 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.[15]This led to Krach and his team's close collaboration in architecting the CHIPS for America component with Senators Cornyn (R-TX) and Warner (D-VA).[16] In June 2020, Senator Warner joined U.S. Senator John Cornyn in introducing the $52 billion CHIPS for America Act.[17]

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".[18] The bill passed the U.S. Senate by a vote of 64–33 on July 27, 2022.[19] On July 28, the $280 billion bill passed the U.S. House by a vote of 243–187–1.[20] On August 1, 2022, the magazine EE Times (Electronic Engineering) dubbed Under Secretary of State Keith Krach (now Chairman of the Krach Institute for Tech Diplomacy at Purdue) the architect of the CHIPS and Science Act.[15] The bill was signed into law by President Joe Biden on August 9, 2022.[3]

Background and provisions[edit]

The bill 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.[21] The bill 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.[22]

For semiconductor and telecommunications purposes, the CHIPS Act designates roughly $106 billion. The CHIPS Act includes $39 billion in tax benefits and other incentives to encourage American companies to build new chip manufacturing plants in the U.S.[23] Additionally, $11 billion would go toward advanced semiconductor research and development, with $8.5 billion of that amount going to the National Institute for Standards and Technology, $500 million to Manufacturing 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 the National Science Foundation to resolve short-term labor supply issues.[24][25]

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 RAN 5G networks."[24][25] 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 act.[26]

The act authorizes $174 billion for uses other than semiconductor and telecom technologies.[24][27] It authorizes, but does not appropriate, extended NASA funding for the International Space Station to 2030, partially funds the Artemis program returning humans to the Moon, and directs NASA to establish a Moon to Mars Program Office for a human mission to Mars beyond the Artemis program. The bill also obligates NASA to perform research into further domesticating its supply chains and diversifying and developing its workforce, reducing the environmental effects of aviation, integrating unmanned aerial vehicle detection with air traffic control, investigating nuclear propulsion for spacecraft, continuing the search for extraterrestrial intelligence and xenology efforts, and boosting astronomical surveys for Near-Earth objects including the NEO Surveyor project.[1][28]

The bill could potentially invest $67 billion in accelerating advanced zero-emissions technologies to mass markets and improving climate science research, according to the climate action think tank Rocky Mountain Institute. The bill would invest $81 billion in the NSF, including new money for STEM education and defense against foreign intellectual property infringement, and $20 billion in the new Directorate for Technology, Innovation, and Partnerships, which would be tasked with deploying the above technologies, and authorizes but does not appropriate $12 billion for ARPA-E.[29] It contains annual budget increases for the United States Department of Energy for other purposes including supercomputer, nuclear fusion and particle accelerator research, and directs the United States Department of Commerce to establish $10 billion worth of research hubs in post-industrial, mostly rural economies.[24][27]

Passage[edit]

President Joe Biden signing the bill into law on the South Lawn of the White House on August 9, 2022
Senate vote by state July 27
  Two yeas
  Yea and Nay
  Two Nays
  Yea and not voting
  Nay and not voting
House vote by congressional district July 28
  Democratic yea (219)
  Republican yea (24)
  Republican nay (187)
  Democratic "present" (1)

Every senator in the Senate Democratic Caucus except for Bernie Sanders voted in favor of passing the CHIPS Act, and they were joined by seventeen Republican senators, including Senate Republican leader Mitch McConnell, Utah senator Mitt Romney, and South Carolina senator Lindsey Graham.[30]

Impact[edit]

Since the May 2020 onshoring of TSMC used by Under Secretary of State Krach as a catalyst for the bill and to secure the U.S. semiconductor supply chain, a significant number of companies and a list of ecosystem suppliers have committed or made announcements totally over $300 billion in investments and jobs in anticipation of the passing of the CHIPS and Science Act.[31][32]

Before the act passed, the following investments were announced:

  • In September 2021, Intel Corp broke ground on two new factories, totaling a $20 billion investment in Arizona, as part of its plan to become a major manufacturer of chips for outside customers.[33]
  • In July 2021, GlobalFoundries announced plans to build a new $1 billion fab in Upstate New York.[34]
  • In November 2021, Samsung announced 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.[35]
  • In January 2022, Intel announced an initial $20 billion investment that will generate 3,000 jobs, making it the largest investment in Ohio's history, with plans to grow to $100 billion investment in eight total fabrication plants.[36]
  • In May 2022, Purdue University launched the nation's first comprehensive semiconductor degrees program in anticipation of the overwhelming need for 50,000 trained semiconductor engineers in the United States to meet the rapidly growing demand in anticipation of the CHIPS Act.[37][38]
  • In May 2022, Texas Instruments broke 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.[39]
  • In July 2022, SkyWater announced plans to build an advanced $1.8 billion semiconductor manufacturing facility in partnership with the state government of Indiana and Purdue University to pursue CHIPS funding.[40][41]

After the CHIPS and Science Act passed, the following investments were announced:

  • In September 2022, Wolfspeed, Inc. announced construction a manufacturing campus in North Carolina including 1,800 new jobs for the production of Silicon Carbide semiconductors with an $5 billion investment over the next eight years.[42]
  • In October 2022, Micron Technology announced it will invest $20 billion in a new chip factory in Clay, New York, to take advantages of the subsidies in the act and up to $100 billion over 20 years.[43][44]
  • In December 2022, TSMC announced the opening of the company's second chip plant in Arizona, raising its investment in the state from $12 billion to $40 billion.[45]

Semiconductor supplier investments in the United States for the next 10 years[46][edit]

Table of projects announced from May 2020 to December 2022:

State Company Name City/ County Investment
Arizona Linde Phoenix $600 million
Sunlit

Chemical

Phoenix $100 million
Air Liquide Phoenix $60 million
Kanto/ Chemtrade

Joint Venture

Casa Grande $175–250

million

Chang Chun

Group

Casa

Grande

$400 million
LCY Chemical Casa

Grande

$100 million
Solvay Casa

Grande

$60 million
Fujifilm Electronic

Materials

Mesa $88 million
JX Nippon

Mining & Metal

Mesa Unknown
EMD

Electronics

Chandler $28 million
Edwards

Vacuum

Chandler Unknown
Yield Engineering

Systems

Chandler Unknown
Connecticut ASML Wilton $200 million
Georgia Absolics Covington $600 million
Michigan Hemlock

Semiconductor

Thomas

Township

$375 million
SK Siltron

CSS

Bay City $300 million
Edwards

Vacuum

Genesee

County

$319 million
New York Corning Monroe

County

$139 million
Oregon Mitsubishi Gas

Chemicals

TBD $372 million
Texas Global Wafers Sherman $5 billion
TOTAL $9 billion

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'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.[47][48]

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 at its advancement through Congress.[49][50][51] It has received widespread support from chip firms, though they were concerned about the provision banning them from further investments in China.[52][53]

Opposition[edit]

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.[30][54][55] China lobbied against the bill and criticized it as being "reminiscent of a 'Cold War mentality'".[56]

Concerns of protectionism[edit]

Commentators[who?] have expressed concerns regarding the protectionist provisions of the CHIPS and Science Act and the risk of a subsidy race with the EU, which passed its own European Chips Act in 2022.[57]

See also[edit]

References[edit]

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  4. ^ "Congressional Bill".
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  39. [1]
  40. ^ Lee, Jane Lanhee (July 20, 2022). "SkyWater unveils plans to build $1.8 bln chip facility in Indiana". Reuters. Retrieved January 5, 2023.
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  42. [2]
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  45. ^ Kinery, Emma. "TSMC to up Arizona investment to $40 billion with second semiconductor chip plant". CNBC. Retrieved January 5, 2023.
  46. ^ "Source: SIA Analysis.Table 2: Semiconductor supplier investments in the next 10 years (projects announced from May 2020 – December 2022)" (PDF). December 2022.
  47. ^ "Governor Wolf, Bipartisan Governors Urge Congress to Pass CHIPS Act to Create American Jobs, Boost Semiconductor Production". Governor Tom Wolf. November 10, 2021. Retrieved August 11, 2022.
  48. ^ "Governors urge passage of CHIPS Act funding to spur semiconductor 're-shoring' | InsideTrade.com". insidetrade.com. Retrieved August 11, 2022.
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  50. ^ BeMiller, Haley. "Intel CEO: Company moving 'full speed ahead' on Ohio plans after CHIPS Act passes Congress". The Columbus Dispatch. Retrieved August 11, 2022.
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  53. ^ Cheng Ting-Fang; Lauly Li; Yifan Yu (August 2, 2022). "CHIPS Act leaves chipmakers facing choice between U.S. and China". NIKKEI Asia. Retrieved August 5, 2022.
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External links[edit]