Summary of the U.S. CHIPS and Science Act of 2022

Last week, the United States House of Representatives passed a $280 billion CHIPS and Science Act. Policymakers pushed the legislation forward, citing competition from China and concerns around national security. 

More than $76 billion were allocated to revive chip production in the U.S., $81 billion will fund the National Science Foundation research and education efforts, and billions of dollars will fund Department of Energy (DOE) programs.

President Biden in a press release mentioned that the bill will lower the cost of everyday goods, create high-paying manufacturing jobs across the country and strengthen our national security and U.S. leadership in the industries of the future at the same time.

The pandemic and the chip shortages of the past few years have brought to light the vital role of semiconductors in global economy and energy sustainability goals. The supply chain breakdowns highlighted global dependencies and fueled efforts by many nations to advance their local chip manufacturing capabilities as key drivers to their economic and military security.

The U.S. found itself in the same predicament with business losing billions of dollars to semiconductor shortages. According to the Semiconductor Industry Association (SIA), the U.S. semiconductor manufacturing capacity has dropped from 37% in 1990 to 12% today, mostly because other countries’ governments have invested ambitiously in chip manufacturing incentives and the U.S. government has not.

This decline is largely due to incentives that lower the cost of semiconductor production abroad. This legislation was designed to help strengthen the U.S. leadership in this sector. 

The bill includes:

• $52 billion grant over five years to help grow the domestic semiconductor manufacturing. $2 billion of which is to explicitly focus on legacy chip production. These chips are essential to the auto industry, the military, and other industries critical to our national security interests.
• A 25 % investment tax credit (ITC) for new or expanded facilities that make semiconductors or chipmaking equipment.
• $200 million funding over five years to the National Science Foundation to “promote growth of the semiconductor workforce.” The Commerce Department expects the United States will need 90,000 more workers in the semiconductor industry by 2025.
• $500 million funding for the CHIPS for America International Technology Security and Innovation Fund. Which is designed for “coordinating with foreign government partners to support international information and communications technology security and semiconductor supply-chain activities, including supporting the development and adoption of secure and trusted telecommunications technologies, semiconductors, and other emerging technologies.”
• $11 billion is appropriated over 5 years to implement programs authorized the National Semiconductor Technology Center (“NSTC”), the National Advanced Packaging Manufacturing Program, and other R&D and workforce development programs authorized. 
• $1.5bn funding to support the Public Wireless Supply Chain Innovation Fund, with a focus on building open-architecture, software-based wireless technologies.
• $9.68 billion for the National Institute of Standards and Technology (NIST) over five years, which will fund its greenhouse gas measurement program, AI, cybersecurity, communication, and digital identity management research. 

Some of the initiatives the bill funds include: 

• Increased funding for expansion of the Hollings Manufacturing Extension Partnership program, an initiative under the National Institute of Standards and Technology aimed at boosting manufacturing capacity in all 50 states and Puerto Rico.
• The creation of Regional Clean Energy Innovation Program that will promote the economic development of diverse regions of the country.
• The first comprehensive funding authorization for the U.S. Department of Energy’s Office of Science, which conducts fundamental scientific research that has powered U.S. innovation and entrepreneurship for decades.
• The creation of a new National Science Foundation (NSF) directorate focused on research and commercialization of technology focus areas that will be key arenas of competition in the 21st century
• An expansion of the Established Program to Stimulate Competitive Research (EPSCoR) to promote advanced science and technological research at universities across the country.
• The establishment of a chief diversity officer at the NSF tasked with ensuring diversity and inclusion in NSF operations and programs.
• Dedicated NSF funding for research and development into critical minerals supply chains.
• Programs and grants to increase the transparency and accessibility of federal STEM education among Historically Black Colleges and Universities, Tribal Colleges and Universities, Hispanic-Serving Institutions, and other minority-serving institutions and to lower barriers to recruitment and advancement of women and minorities in STEM.