CHIPS and Science Act

TheCHIPS and Science Actis a U.S. federal statute enacted by the117th United States Congressand signed into law by PresidentJoe Bidenon August 9, 2022. The act authorizes roughly $280 billion in new funding to boost domestic research and manufacturing ofsemiconductorsin the United States, for which it appropriates $52.7 billion.The act includes $39 billion in subsidies for chip manufacturing on U.S. soil along with 25% investment tax credits for costs of manufacturing equipment, and $13 billion for semiconductor research and workforce training, with the dual aim of strengthening Americansupply chain resilienceand counteringChina.It also invests $174 billion in the overall ecosystem of public sector research in science and technology, advancinghuman spaceflight,quantum computing,materials science,biotechnology,experimental physics, research security, social and ethical considerations, workforce development anddiversity, equity, and inclusionefforts atNASA,NSF,DOE,EDA, andNIST.
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 theCHIPS Act of 2022(where CHIPS stands for the former"Creating Helpful Incentives to Produce Semiconductors" for America Act); Division B is theResearch and Development, Competition, and Innovation Act; and Division C is theSupreme Court Security Funding Act of 2022.
By March 2024, analysts estimated that the act incentivized between 25 and 50 separate potential projects, with total projected investments of $160–200 billion and 25,000–45,000 new jobs. However, these projects are faced with delays in receiving grants due to bureaucratic hurdles and shortages of skilled workers, both during the construction phase and upon completion in the operational/manufacturing stage, where 40% of the permanent new workers will need two-year technician degrees and 60% will need four-year engineering degrees or higher.In addition, Congress had routinely made several funding deals that underfunded key basic research provisions of the Act by tens of billions of dollars.
TheCHIPS and Science Actcombines two bipartisan bills: theEndless Frontier Act,designed to boost investment in domestic high-tech research, and theCHIPS for America Act,designed to bring semiconductor manufacturing back to the U.S. The act is aimed at competing with China.
TheEndless Frontier Actwas initially presented to SenatorsChuck Schumer(D-NY) andTodd Young(R-IN) byUnder Secretary of StateKeith Krachin October 2019, as part of the Global Economic Security Strategy to boost investment in high-tech research vital to U.S. national security.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).On May 27, 2020, Senators Young and Schumer, along with CongressmenRo Khanna(D-CA) andMike Gallagher(R-WI.), introduced the bipartisan, bicameralEndless Frontier Actto 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.
TheUnited States Innovation and Competition Act of 2021 (USICA)(S. 1260), formerly known as the Endless Frontier Act, was United States legislation sponsored bySenate Majority LeaderChuck 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 inartificial intelligence,semiconductors,quantum computing, advanced communications,biotechnologyand advanced energy, amounts to $100 billion. Over $10 billion was authorized for appropriation to designate ten regional technology hubs and create asupply chain crisis-response program.
The CHIPS for America Act portion stemmed from Under Secretary of StateKrachand his team brokering the $12 billion on-shoring ofTSMC(Taiwan Semiconductor Manufacturing Company) to secure the supply chain of sophisticated semiconductors, on May 15, 2020.Krach's stated strategy was to use theTSMCannouncement 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.This led to Krach and his team's close collaboration in creating the CHIPS for America component with SenatorsJohn Cornyn(R-TX) andMark Warner(D-VA).In June 2020, Senator Warner joined U.S. SenatorJohn Cornynin introducing the $52 billion CHIPS for America Act.
Both bills were eventually merged into theU.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 bipartisanCHIPS and Science Act, or "CHIPS Plus".The bill passed theU.S. Senateby a vote of 64–33 on July 27, 2022.On July 28, the $280 billion bill passed theU.S. Houseby a vote of 243–187–1.On August 1, 2022, the magazineEE Times(Electronic Engineering) dubbed Under Secretary of StateKeith Krach(as of February 2023, now the current Chairman of the Krach Institute for Tech Diplomacy atPurdue University) the architect of the CHIPS and Science Act.The bill was signed into law by PresidentJoe Bidenon August 9, 2022.
The law constitutes an industrial policy initiative which takes place against the background of a perceivedAI Cold Warbetween the US and China, asartificial intelligencetechnology relies on semiconductors.The law was considered amidst aglobal semiconductor shortageand intended to provide subsidies and tax credits to chip makers with operations in the United States. TheU.S. Department of Commercewas 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 theNational Institute for Standards and Technology, $500 million toManufacturing 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 theNational Science Foundationto resolve short-term labor supply issues.
According toMcKinsey, "The CHIPS Act allocates $2 billion to theDepartment of Defenseto fund microelectronics research, fabrication, and workforce training. An additional $500 million goes to theDepartment of Stateto 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 openRAN5Gnetworks."(The open RAN research innovation fund is controlled by theNational Telecommunications and Information Administration.)Companies are subjected to a ten-year ban prohibiting them from producing chips more advanced than28 nanometersin China and Russia if they are awarded subsidies under the law.
The law authorizes $174 billion for uses other than semiconductor and telecom technologies.It authorizes, but does not appropriate, extendedNASAfunding for theInternational Space Stationto 2030, partially funds theArtemis programreturning humans to the Moon, and directs NASA to establish a Moon to Mars Program Office for ahuman mission to Marsbeyond the Artemis program. The bill also obligates NASA to perform research into further domesticating its supply chains and diversifying and developing its workforce, reducing theenvironmental effects of aviation, integratingunmanned aerial vehicledetection withair traffic control, investigatingnuclear propulsionfor spacecraft, continuing thesearch for extraterrestrial intelligenceandxenologyefforts, and boostingastronomical surveysforNear-Earth objectsincluding theNEO Surveyorproject.
The law could potentially invest $67 billion in accelerating advanced zero-emissions technologies (such as improvedenergy storage,hydrogen economytechnologies, andcarbon capture and storage) to mass markets, advancing building efficiency, and improvingclimate scienceresearch, according to the climate action think tankRocky Mountain Institute. The law would invest $81 billion in the NSF, including new money forSTEMeducation (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 foreignintellectual 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 forARPA-E.For theUnited States Department of Energythe law creates a new501(c)(3) organization, theFoundation for Energy Security and Innovation, to leveragephilanthropyfor improving the workforce and bolstering energy research.It contains annual DOE budget increases for other purposes includingsupercomputer,nuclear fusionandparticle acceleratorresearch as well asminority-serving institutionoutreach 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 onConfucius 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 ofpublic participatory technology assessment; the law doesnotinvoke 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 theEddie Bernice JohnsonINCLUDES Network to serve as the NSF's maindiversity, equity, and inclusionprogram. 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 doesnotinvest in theUnited States Department of Laborto carry this out.
Every senator in theSenate Democratic Caucusexcept forBernie Sandersvoted in favor of passing the CHIPS Act, and they were joined by seventeen Republican senators, including Senate Republican leaderMitch McConnell, Utah senatorMitt Romney, and South Carolina senatorLindsey Graham.
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'sTom Wolf, Alabama'sKay Ivey, California'sGavin Newsom, Kentucky'sAndy Beshear, Michigan'sGretchen Whitmer, Wisconsin'sTony Evers, Illinois'J. B. Pritzker, Kansas'Laura Kelly, and North Carolina'sRoy Cooperpushed for the passage of the bill back in November 2021.
Separately, Ohio governorMike DeWine, whose state became the home ofIntel's newestsemiconductor fabrication plantin theColumbussuburb ofNew Albany, as well as Texas governorGreg Abbottand Texas senatorJohn Cornyn, whose state was the home of a major investment fromSamsung, each pushed for the bill to be passed and applauded its advancement through Congress.It has received widespread support from chip firms, though they were concerned about the provision banning them from further investments in China.
IntelCEOPat Gelsingersaid during an earnings call on September 30, 2022, that CHIPS Act subsidies were leading the company to explore building empty fab buildings (known as a "shell-first strategy") and aggressively acquire smaller competitors before installing any equipment, to avoid contributing to a predicted semiconductor glut.
The bill was criticized by Republican House leaderKevin McCarthyand senatorBernie Sandersas a "blank check", which the latter equated to a bribe to semiconductor companies.China lobbied against the bill and criticized it as being "reminiscent of a 'Cold War mentality'".
In a piece for theBrookings Institutionon December 20, 2022,Sarah Krepsand Paul Timmers expressed concerns regarding the protectionist provisions of the CHIPS and Science Act and the risk of a subsidy race with theEU, which proposed its ownEuropean Chips Actin 2022.
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.
Writing in the Substack climate and finance newsletterThe Gigaton, Stanford MBA students Georgia Carroll and Zac Maslia criticized the Act for lacking incentives to addrenewable energyto chipmakers'base loads, andreclaimed waterandPFASalternatives to their material inputs, and noted the extensive environmental impact of the chipmaker and data center industry was at odds with the output from the new research programs of the Act.
Robert Kuttner,economic nationalistcommentator and editor ofThe American Prospect, expressed concerns that the bill did not provide enough resources to allow local residents near fabs to organize or form atrade union(thereby making unions rely too heavily oncommunity benefits agreementscompared to federal policy), that the Commerce Department would be too friendly to states withright-to-work laws(where the first new fabs would be built), that the bill did not restrictively define a "domestic company" regarding financing, and that fab owners would simply use CHIPS Act money tobuy back stocks.In response to these concerns, on February 28, 2023,United States Secretary of CommerceGina Raimondopublished the first application for CHIPS Act grants, which encourages fab operators to useProject Labor Agreementsfor facilitating union negotiations during construction, outline their plans to curtail stock buybacks, share excess profits with the federal government, and open or point out nearbychild carefacilities.The application led to over 200 statements of interest from private companies within the first month and a half, looking to invest across the entire semiconductor supply chain in 35 states;by June 2023, the number had reached over 300.TheProspectlater covered the lack of progress in PLA talks between key investorTSMCand local unions in Phoenix, and included both author Lee Harris's claim that the Raimondo guidance was insufficient in helping the talks, and liberal commentatorEzra Klein's criticism of the Raimondo guidance as excessive.Harris later reported that as a consequence TSMC and its non-union subcontractors had routinely engaged in alleged wage theft, underreported safety violations, and cut out various installation procedures that would have prevented costly repairs, delaying its projects.
In February 2024, the antitrust think tankAmerican Economic Liberties Projectreleased a report evaluating the state of the semiconductor industry after the CHIPS and Science Act passed. It found that the Act was insufficient in dealing with what it saw as the effectivemonopolizationandmonopsonyof the American semiconductor industry by TSMC and by 'fabless' semiconductor firms that practiced routine outsourcing, such asNvidiaandApple Inc., the result of shareholder-driven decisions. It also found the Act was insufficient in shoring up American mid-level, consumer market-oriented manufacturing by increasing competition and resiliency there. It recommended that the Commerce Department increasingly involve theFederal Trade Commissionand other antitrust agencies in its decision-making, incubate four mid-size competitors to TSMC, require 'fabless' firms to double their source numbers, and strategically levytariffsand fees on select consumer electronics deemed lacking in American sourcing.
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 promotingexperiential learningin 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.
In September 2024, theNational Academies of Sciences, Engineering, and Medicineproduced a report on NASA's organizational efficiency mandated by the law,which found several critical weaknesses, namely, in long-term planning, workforce retention, headquarters staffing levels, budgetary support from Congress, aging infrastructure, and emphasis on research and development as part of instrument planning.
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 producingApple A16chips 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.
These include (before the act passed on August 9, 2022):
After the act passed:
The following projects were announced after the Act's first anniversary:
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 Groupand theSemiconductor Industry Associationestimated 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 October 23, 2023, the Biden administration announced that it directed theEconomic Development Administrationto focus on 31 areas (across 32 states andPuerto Rico) that it designated "Tech Hubs", for the purposes of spreading development evenly around the country, and incubating advanced technology and research. The Tech Hubs' organizers competed for a total of about $500 million in implementation grants, the first such appropriation out of a budgeted $10 billion over the next five years. The Biden administration also gave out "Strategy Development Grants" to 29 consortia of businesses, labor unions and governments in areas that lost out, encouraging further organizational improvements before trying again to become a Tech Hub.
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.
Estimates of the results of the CHIPS Act vary. The trade groupSemiconductor Industry Association, which analyzed announced investments from May 2020 to December 2022, claimed the CHIPS Act had led to more than 50 projects worth more than $200 billion that would create 44,000 jobs.By the count of policy researcher Jack Conness, the CHIPS Act led to 37 projects worth $272 billion and a predicted 36,300 jobs as of November 14, 2024;  when considered together withInflation Reduction Actinvestments, the total comes out to 218 projects worth $388 billion creating 135,800 jobs.
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).
In December 2023, theFinancial Timesfound the IRA and CaSA together catalyzed over $224 billion in investments and over 100,000 new jobs by the preceding July.
According to theNew Democrat-linked think tankCenter for American Progress, the CHIPS and Science Act, the Inflation Reduction Act, and theInfrastructure Investment and Jobs Acthave together led to more than 35,000 public and private investments.The Biden administration itself claimed that as of January 10, 2025, the IIJA, CaSA, and IRA together catalyzed $1 trillion in private investment (including $449 billion in electronics and semiconductors, $184 billion in electric vehicles and batteries, $215 billion in clean power, $93 billion in clean energy tech manufacturing and infrastructure, and $51 billion in heavy industry) and over $756.2 billion in public infrastructure spending (including $99 billion in energy aside from tax credits in the IRA).
InCalifornia, where the semiconductor industry was founded inSilicon Valley, experts say that it is very unlikely that any new manufacturing facilities will be built, due to tight regulations, high costs of land and electricity, and unreliable water supplies.These factors have contributed to the state's 33% decline in manufacturing jobs since 1990.
In May 2023,Applied Materialsannounced it would build a new collaborative advanced research and development center (distinct from traditional fabs) named the "EPIC Center", short for "Equipment and Process Innovation and Commercialization Center", by 2026, next to its existing facility inSunnyvale, California. The first known CHIPS Act-linked investment in Silicon Valley, the EPIC Center is worth $4 billion and is projected to create 2,000 jobs.
In June 2023, after the passage of thedebt-ceiling deal,Federation of American Scientistsanalysts Matt Hourihan and Melissa Roberts Chapman andBrookings Institutionanalyst Mark Muro noted that theConsolidated Appropriations Act, 2023had underfunded three key agencies to the Science Act (the NSF, the DOE's Office of Science, and NIST) by $2.7 billion, or 12 percent compared to the Act's intent, and that the President's proposal for the2024 United States federal budgetwould likely shortchange them by $5.1 billion, or 19 percent compared to the Act's intent. Upon reviewing the effects the shortfalls would bring on defense policy and the economy, they recommended that more science and technology spending be moved into the mandatory category, as had been done with some semiconductor spending.
In March 2024,Politicocontributor Christine Mui cited Hourihan in detailing how the Science Act interacted with later spending deals. In the actual 2024 budget, the NSF was underfunded by 42 percent compared to the Act's authorization and by 11 percent compared to its budget request; the Department of Energy's Office of Science was underfunded by 13 percent compared to the Act's authorization, while theEconomic Development Administration's regional hubs program was funded with $41 million ($541 million since 2022) against an annual authorization of $2 billion ($4 billion from 2022); NIST's budget, for which the 2023 Appropriations Act appropriated $1.564 billion and the Science Act authorized $1.562 billion, saw an 11 percent cut and NASA's budget fell 9 percent short of its request.As of April 2024, CHIPS research agencies have been underfunded by over $8 billion.
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 nonprofitpublic–private partnershipwithin NIST calledNatcastin April 2023,putting out a call for volunteers to select who will serve as board members.In June, the selection committee was announced asJanet Fouttyof Deloitte,John L. Hennessyof Alphabet,Jason Gaverick Mathenyof 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 Barrettof Intel, Reggie Brothers of the MIT Lincoln Lab,Nick Donofrioof IBM,Donna Dubinskyof Palm and Handspring, and Erica Fuchs of Carnegie Mellon University.They selectedDeirdre Hanfordof Synopsys to serve as Natcast's CEO.As of October 24, 2024, 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 current headquarters of Natcast are in a strip mall inPortola Valley, California.States that have received huge amounts of semiconductor investments such as New York, Ohio, Arizona and Texas are vying as of May 2024to have the headquarters relocated in them.In October, the first flagship NSTC site was announced, anextreme ultraviolet lithographyresearch lab at theAlbany Nanotech ComplexinAlbany, New York.The second flagship site was announced the next day as a chip design lab inSunnyvale, California.In January 2025, the third flagship site, a lab for chip packaging, was announced asArizona State University Research ParkinTempe.
Arrian Ebrahaimi and Jordan Schneider, writing for theInstitute for Progress, recommended the NSTC be structured with more centralization, work quickly and ambitiously to address market failures and externalities in chip research, and follow the management model of the similar Belgian companyIMEC.
The Biden administration will also invest at least $200 millionin a new Manufacturing USA Institute under the Act, focused on spreading the use ofdigital twinsin semiconductor design,and $300 millionin the NIST Advanced Packaging Manufacturing Program, focused on researching newsubstratechemistries forsemiconductor packaging.The Commerce Department also awarded $100 million to 29 research projects in advancedmetrologyby 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 October 2022, SenatorsElizabeth WarrenandTammy Baldwinand RepresentativesSean Casten,Jamaal Bowman,Pramila JayapalandBill Fostersent a letter to Secretary Raimondo urging her to detail how the Commerce Department would enforce the law's provisions preventing companies from using CHIPS Act money directly on stock buybacks (they noted the law does not prevent recipients from using the money to free up their own funds for stock buybacks), as well as whether the department would claw back misused funds and resolve conflicts of interest.On February 10, 2023, they and Senators Bernie Sanders andEd Markeyrepeated many of the same points to Michael Schmidt, head of the Department's CHIPS Program Office, and urged even stronger action, outlining what regulatory crackdowns the law authorizes the department to do.
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 fromThe Wall Street JournalandBloomberg Newsthe 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.
At the timeBAE Systemswas announced to be receiving a CHIPS Act grant, Warren and Casten wrote to CEO Tom Arsenault that they wanted BAE Systems to conform with the spirit of the Act, noting that BAE had engaged in $9.4 billion in stock buybacks the previous year.JournalistLes Leopoldlater cited the letter andChris Van Hollen's statements on the subject to denounce Intel's engagement in similar practices netting them nearly $153 billion since 1990 and their recent mass layoffs, following the $8.5 billion grant receipt announcement.
As of January 2024only two small grants had been awarded, neither for production of the most advanced chips.
One hurdle delaying the release of award monies is theNational Environmental Policy Act, which requires that projects receive federal approvals before any funds can be dispersed. A federal government analysis cited byThe Wall Street Journalfound that these approvals, from 2013 to 2018, have taken an average of 4.5 years to receive.
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,wafermakers, and chemical engineering firms.However, by mid-November 2024, onlyPolar Semiconductorand 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 the2 nm processwould 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.
In August 2024, theProspectreported on several effects of the CaSA on unionization, neutrality on which the CaSA does not require of grant recipients; more specifically, it covered Secretary Raimondo's lack of enforcement of the Commerce Department's Good Jobs Principles. Workers at anAnalog Devices, Inc.fab inBeaverton, Oregonprotested unsafe working conditions the previous June, and are lobbying Oregon state legislators to add  unionization neutrality provisions to their state-level version of the Act.Microchip TechnologyVice President Dan Malinaric was recorded in July as pressuring workers to not form a union, a violation of theWagner Act. TheCommunications Workers of Americaunion was only able to reach community benefits agreements with a select few firms benefiting from the Act, includingAkash Systems.
In March 2024,Bloomberg Newsreported that Intel was poised to receive $3.5 billion from the CaSA in theyear's federal budget(specifically the second 'minibus') as part of a "secure enclave" program which Intel claimed would help facilitate national security through carrying outUnited States Department of Defensecontracts with high levels of secrecy.Citing interviews of Charles Wessner of theCenter for Strategic and International Studiesand key congressional aides, and a risk assessment report from theUnited States Department of the Air Force, Austin Ahlman of the antitrust think tank Open Markets Institute criticized the plan, not least because it would take up more than 10 percent of the $39 billion in grants the Act designates for domestic semiconductors, as well as increase concentration in the domestic semiconductor industry.GlobalFoundriesexecutives also criticized the plan. The DoD later withdrew its $2.5 billion contribution to the secure enclave plan and gave it to the Commerce Department,which allowed Intel to finalize the funding agreement on September 16, 2024,amid concerns of its shaky financial performance and lagging customer outreach.The funding agreement resulted in a reduction of Intel's later grant from an announced $8.5 billion to $7.86 billion in November.
The State Department has awarded $200 million in partnerships to academia and foreign companies as of July 2024under the Act's International Technology Security and Innovation Fund. The State Department has partnered with the governments ofCosta Rica,Panama,Vietnam,Indonesia, thePhilippinesandMexicoto distribute these funds, for technology incubation purposes.
In order to manufacture chips for national security needs, the US military has partnered with Indianstartupsto establish a semiconductor fabrication plant inIndia. With assistance from the India Semiconductor Mission and a strategic technology cooperation between theUnited States Space Force(USSF), Bharat Semi, and 3rdiTech, the fabrication plant would producesilicon carbide, infrared, andgallium nitridechips. The plant will prioritize supplying the high-voltagepower electronics, advanced communications, and advanced sensors that are the three fundamental foundations ofmodern 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.
The two-way cooperation is part of the CHIPS and Science Act andUnited States–India Initiative on Critical and Emerging Technology. In order to design and develop military-grade semiconductor fornight vision devices,missile guidance, space sensors, drones,fighter aircraft,electric vehicles,military communications,radars, and jammers, the collaboration involves setting up design hubs, testing centers, centers of excellence, and two fabrication units.The project will receive a 50%capital expendituresubsidy from the India Semiconductor Mission.
To address the defense demands of the United States and its allies, the Shakti Semiconductor Fab will acquire complete expertise in the development ofcompound 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 Atomicsis 3rdiTech's technology validation partner.The company has worked under the DoD and theMinistry of Defencein 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 betweenPresidentJoe BidenandPrime MinisterNarendra ModiinDelaware, 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, SenatorsMark Kelly,Sherrod Brown,Todd Young,Ted Cruz, andBill Hagertyintroduced 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, 2023and again in December 2023. The House passed the companion bill on September 23, 2024, with a vote of 275–125. Amid protests fromZoe Lofgren, theSierra Club,Center for Biological Diversity, CHIPS Communities United, and two dozen other environmental groups,President Biden signed the bill into law on October 2.