CHIPS for America Act Brings Big Bucks to Semiconductor Industry
To ease the pressure of the semiconductur shortage, the U.S. Senate last week passed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act on July 27, 2022 and the House of Representatives passed the bill on July 28. President Biden highlighted his strong support for the bipartisan legislation in both a statement and a tweet. His statement signaled the expectation the bill would boost domestic semiconductor manufacturing via economic incentives while at the same time strengthening national security by making the country—and, by extension, the defense sector—less reliant on foreign-made semiconductors.
Earlier today, I was joined by industry and labor leaders to discuss the importance of passing the CHIPS for America Act to supercharge our efforts to make semiconductors right here in America.
I’m ready to sign this strong, bipartisan bill into law. pic.twitter.com/wNoSaWqcus
— President Biden (@POTUS) July 26, 2022
Prior to the bill’s passage, Commerce Secretary Gian Raimondo told CNBC’s Closing Bell, “If you allow yourself to think about a scenario where the United States no longer had access to the chips currently being made in Taiwan, it’s a scary scenario. It’s a deep and immediate recession. It’s an inability to protect ourselves by making military equipment. We need to make this in America. We need a manufacturing base that produces these chips, at least enough of these chips, here on our shores because otherwise, we’ll just be too dependent on other countries.”
The bill puts forward $52 billion to subsidize the domestic semiconductor industry, with some stipulations and restrictions. For example, monies from the bill may not be used to expand or build capability in countries which may be a national security threat to the United States.
The Semiconductor Industry Association (SIA), as expected, rejoiced at the passage of the bill. The SIA noted that the U.S. makes up only 12% of the global capacity in the manufacture of semiconductors in 2022. The SIA ascribed this to the substantial financial incentives made abroad by global competitors and the lack of investment by the U.S. government. John Neuffer, president and CEO of the SIA observed, “By passing the CHIPS Act, Congress has risen to a defining challenge of our time, seized a historic opportunity to fortify American semiconductor manufacturing, design and research, and delivered a big win for our country. The bill’s investments in chip production and innovation will strengthen America’s economy and national security—both of which rely heavily on chips—and reinforce our country’s semiconductor supply chains.”
The Washington Post/Bloomberg’s analysis of the CHIPS Act noted that chip design firms, like Nvidia, Qualcomm and Broadcom are left out of the mix, as the bill focuses on manufacturing. They continued that it is unlikely that these firms will complain, as their suppliers will also benefit from the bill’s passage. Time will tell.
