The CHIPS and Science Act of 2022, often shortened to just the CHIPS Act or H.R.4346 (in Washington-speak), is a bill that received bipartisan support in the House of Representatives and the Senate. The final version passed in the House with 243 votes in favor and 187 against, and President Biden has signed it into law. The White House Fact Sheet offers details here.
The main centerpiece of the CHIPS Act (the acronym spelled out is the “Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Fund.).” The bill sets aside more than $52 billion in subsidies to “support the development and adoption of secure and trusted telecommunications technologies, secure semiconductors and their supply chains, and other emerging technologies.” That money is intended to “fund the construction of semiconductor fabrication plants,” i.e., “fabs” for short, in the United States. This means new, good jobs for America to help secure our future.
“CHIPS” will create many new, good jobs here in the U.S. The bill also aims to boost education and science work in the United States, including establishing multiple “Carbon Materials Research Center” locations, coordinating climate research between the National Oceanic and Atmospheric Administration (NOAA), National Aeronautics and Space Administration (NASA), and other agencies, improving (Science, Technology, Engineering, and Mathematics) STEM education programs, upgrading the Energy Sciences Network, and more. The entire CHIPS Act is over 1,000 pages long.
We need the CHIPS Act because modern semiconductor chips — required for all modern electronics, from smartphones to trucks — have been in short supply over the past few years. Limited production capacity, growing demand for electronics, political disputes, and supply chain problems from the COVID-19 pandemic are all contributing factors. Only a few factories in the world can produce chips with smaller processes, so when one of them has problems (like Taiwan dealing with water shortages), it has ripple effects throughout the entire supply chain. That’s why it’s essential to build more factories in more locations around the world.
There are other political factors involved with chip production. Taiwan, where TSMC and most of the company’s factories are based, is at the center of escalating political tensions between China and the United States. Many other crucial factories are in mainland China, which is still in a trade war with the United States. Simply put, many government officials in the United States would prefer to be less reliant on importing chips from other countries — which is why the CHIPS Act offers companies resources to build factories in the U.S.
- Editor’s note: Former President Trump began the trade war with China in 2018. Readers will remember Trump’s daughter — Ivanka, receiving numerous trademark protections from China in 2019. See “Trump’s Trade War” at the bottom of this story.
Does the CHIPS Act Matter to Me?
Businesses and governments have already proved that they care about the CHIPS Act, but what about us? Will it change our day-to-day lives? Well, that’s harder to answer right now, but new good jobs and heightened protections related to national security should matter.
We know that the CHIPS Act won’t change anything shortly. It takes years to plan and build new chip fabrication plants. However, if the new “fabs” provide more manufacturing capacity as arranged, it could reduce the price of semiconductor chips and lead to cheaper electronics. The diversified production might also reduce future chip shortages.
The promised result depends on more devices switching to chips built in the United States, e.g., from Intel, which is building two “CHIP fabs” in Ohio. Intel can’t yet match TSMC and Samsung’s more advanced chip production lines, and the company has gone through multiple delays with new chips. In short, we’ll have to wait and see.
In summary, the Majority Leader’s Office has released the following: What They’re Saying: The CHIPS and Science Act Will Fight Inflation and Bolster Our National Security.
Joyce Hunter is the former Deputy CIO for Policy and Planning and the Acting CIO for the U.S. Department of Agriculture. She is currently the Executive Director of the Institute for Critical Infrastructure Technology (ICIT, www.icitech.org ) and the Founder and President of the Data Science Camp Inc. (www.datasteamcamp,org)
Addendum: PIIE –Petersen Institute for International Economics: Trump’s Trade War Timeline: An Up-to-Date Guide