Biden Gives CHIPS+ Act Final Stamp of Approval—But Not Everyone is Celebrating
A go-ahead has been given to the CHIPS and Science Act as President Biden signed off the law on Tuesday.
The law, also called the CHIPS+ Act, affirms the U.S.' unwavering stance on long-term investment in semiconductor manufacturing. Although the newly-passed law initially aims to boost national chipmaking capacities, it comes with other goals to rebuild the semiconductor ecosystem.
While the CHIPS and Science Act has been put through an exhaustive legislative evaluation and delays, it has now come to an optimistic conclusion. The presidential sign-off promises a historical change in the U.S. semiconductor industry that legislators hope will spill over to other areas, reinforcing national security and bolstering the economy with cutting-edge electronics and modern technologies.
President Biden signing the CHIPS+ Act. Screenshot used courtesy of PBS News Hour [video]
In this article, we'll cover some highlights of the CHIPS+ Act and the effects it could have.
Key Points of the CHIPS+ Act
Apart from approving $52 billion in funding, the law further removes bureaucratic obstacles and commercial bottlenecks. The legislation provides resources for chipmakers, R&D centers, universities, and government agencies to come together and create a well-oiled machine with tens of thousands of new jobs for union and high-skilled workers across the country.
Out of the $52 billion, $39 billion are for manufacturing incentives, $2 billion for legacy chips used in defense and vehicles, $13.2 billion for research and job creation, and $0.5 billion for strengthening the information communication technology (ICT) sector.
The extended effects of the new manufacturing subsidies may create a torrent of beneficial changes for the U.S. transportation infrastructure and construction industry. Advancements introduced with the new law include:
- Establishing a domestic microelectronics training network
- Developing a chiplet platform for faster innovation
- Building the "fastest of the fast" zettascale computers
- Building an inclusive interagency permitting facilitation network
- Increasing national R&D by one percent
- Clearing the road for startups to gain momentum as they innovate
The Importance of CHIPS+
Semiconductor manufacturing is multifaceted and at the top of national security priorities. Chipmaking is integral to the automotive and defense industries and is interdependent with information and communication companies. This includes wireless technologies necessary for creating resilient and pliable supply chains that depend on interoperable radio access networks.
Sciences of the future— biotechnology, nanotechnology, AI, and quantum computing — rely on sophisticated chip technology and will benefit from domestic wafer fabs and scientific brilliance. The law is expected to expand technological development past the orthodox coastal areas, create regional semiconductor development hubs, and produce catchall STEM opportunities across communities.
How Soon Could We See the Effects?
When can the semiconductor industry expect to feel the effects of the Act kick in?
The passing of the law itself has been marked by delays—some of which involved previous contractual commitments to foreign fab makers. Existing obligations could put some manufacturers in a disadvantageous position and further halt the onshoring process.
Chipmakers usually focus on one or two semiconductor manufacturing specialties and often offshore one or more links in the supply chain. Most of all advanced chips are made in Asia. In particular, China has been a dominant player on the global semiconductor stage and intends to spend a trillion dollars to come on top.
Top global chipmakers by revenue in 2022. Screenshot used courtesy of Statistics and Data
With that in mind, not all chipmakers worldwide are equally thrilled by the act. Many might be forced to choose which country's incentives are most advantageous, and this either/or situation may negatively impact business.
Micron, Qualcomm, and GF: The First Three to Get a Boost
Micron, the sole U.S. leading-edge memory chipmaker, has stepped forward with an announcement for a $40 billion investment to support the prevalence of made-in-the-USA memory chips. Its ambition is to increase the number of U.S.-made chips from one in fifty to one in ten devices.
Global Foundries (GF) and Qualcomm have partnered in a $4.2 billion deal to double-up the New York-based manufacturing of FinFET transistor platforms for advanced mobile, automobile, and IoT applications. Made in the presence of Ford Motor Company and Applied Materials, the GF announcement aims to secure the support of important U.S. ecosystem partners and gain access to Qualcomm's proprietary technology made in Germany, France, and Singapore.
Will these plans bring instant results? Most companies do not expect a major situation overturn for at least several years. Micron has laid its plans across ten years and Qualcomm across five years.
Keith Krach, CHIPS and Science Acts architect. Image used courtesy of Keith Krach
The CHIPS+ Act intends to rebuild U.S. semiconductor manufacturing from the bottom to the top; laying a firm foundation is impossible without prioritizing manufacturing incentives. Chip designers come next. According to Keith Krach, the main builder of the CHIPS and Science Act, they may need to wait for their piece of the pie until the capital costs invested in manufacturing deliver a ripple effect across industries. Alternatively, they can focus on applying for R&D grants.
Potential Struggles From the CHIPS+ Act
Part of the U.S. policy for bolstering supply chain resilience is onshoring manufacturing. Some initiatives come from Samsung, which expressed an intention to invest in a new plant in tech-friendly Texas. Another comes from TSMC announcing the building of a 5nm wafer fab plant in Arizona, which comes on top of the existing one in Camas, Washington.
Despite that new fab, TSMC may not be as attractive to STEM graduates, who prefer applying for jobs at Intel, which also has fabs in Arizona. Additionally, because TSMC makes advanced chips for Chinese consumer companies, it is in the most compromising position.
Intel may also face its fair share of problems in other areas; talent shortage is the least of them. In the current CHIPS+ Act climate, Intel may need to curb its Chinese market expansion to receive national grants.
Intel may need to tighten the belt despite the high hopes of profiting from government subsidies. It remains to be seen how many of Intel's ambitious plans—opening a new Ohio fab, expanding in the graphics chips sector to compete with NVIDIA, amping up automotive silicon chips, and developing an AI accelerator—will come to pass.
What are your thoughts on the CHIPS and Sciences Act? Let us know in the comments down below.
