The CHIPS and Science Act combines two bipartisan 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.S. The act is aimed at competing with China.
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 $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.
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. 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.
For semiconductor and telecommunications purposes, the CHIPS Act designates roughly $106 billion. The CHIPS Act includes $39 billion 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. Additionally, $11 billion would go toward advanced semiconductor research and development, separable into $8.5 billion of that total 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.
The law could potentially invest $67 billion 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 $81 billion 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") 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 as well as promoting social and ethical considerations, and authorizes but does not appropriate $12 billion for ARPA-E. 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. 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 $10 billion worth of research hubs in post-industrial rural and urban communities that have been subjected to historical underinvestment.
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.
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. 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. 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.
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.
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. 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.
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. 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.
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.
Many companies and ecosystem suppliers have announced investment plans since May 2020, when TSMC announced that it would build a fab in Arizona, which upon completion began producing Apple A16 chips in earnest in mid-September 2024, according to independent journalist Tim Culpan, achieving 4 percent higher production yields than the average in Taiwan by late October.
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).
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.
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).[needs update]
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.
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, putting out a call for volunteers to select who will serve as board members. 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. In September, the selection committee's activities were closed. 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. They selected Deirdre Hanford of Synopsys to serve as Natcast's CEO. As of October 24, 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", beginning its first $100 million grant competition in the summer, with a focus on improving artificial intelligence and making cutting-edge research cheaper. 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.
The Biden administration also invested at least $200 million in a new Manufacturing USA Institute under the Act, focused on spreading the use of digital twins in semiconductor design, and $300 million in the NIST Advanced Packaging Manufacturing Program, focused on researching new substrate chemistries for semiconductor packaging. The Commerce Department also awarded $100 million to 29 research projects in advanced metrology by February, and released a new notice of opportunity for metrology research funding on April 16.
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.
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.
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. However, by mid-November 2024, only Polar Semiconductor and TSMC's grant deals had been finalized by the Biden administration. 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.
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. 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.
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. (A third fab intended for hosting the 2 nm process would be announced in April 2024, though construction would not start until 2028.) 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.
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.
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.
The State Department has awarded $200 million in partnerships to academia and foreign companies as of July 2024[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.
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.
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. The company has worked under the DoD and the Ministry of Defence in the United Kingdom.
Designed for national security, the fabrication plant is the first multi-material fabrication facility in the world. On September 21, 2024, at a bilateral meeting between President Joe Biden and Prime Minister Narendra 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.
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. The Senate passed the bill once on July 28, 2023 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, President Biden signed the bill into law on October 2.
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89 CFR 6506 /wiki/Code_of_Federal_Regulations
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89 CFR 6508 /wiki/Code_of_Federal_Regulations
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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. https://www.wsj.com/tech/arizona-labor-spat-signals-challenges-for-u-s-chip-manufacturing-5632cfe3
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. https://www.wsj.com/tech/arizona-labor-spat-signals-challenges-for-u-s-chip-manufacturing-5632cfe3
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. https://www.wsj.com/tech/arizona-labor-spat-signals-challenges-for-u-s-chip-manufacturing-5632cfe3
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