To boost domestic production of semiconductors, Congress passed the CHIPS and Science Act in 2022. In the two years since, the Biden administration has spent more than half of the Act’s $39 billion in incentives on major chip manufacturers, including Intel, TSMC, Samsung and Micron.
According to the Financial Times, the move has been a success.
Several chip companies and supply chain partners have pledged investments totaling $327 billion over the next 10 years, according to the Semiconductor Industry Association.
Such progress aligns with Commerce Secretary Gina Raimondo’s expectations that America will produce around 20% of the world’s most advanced chips by 2030, which is at zero right now, reported FT.
Why is chip production important?
The COVID-19 pandemic created microchip shortages in the US, affecting auto and tech manufacturing. It made the White House realize how overly reliant the country has been on China-produced chips.
The wake-up call eventually led to the bipartisan-supported CHIPS Act, which provides over $52 billion in subsidies for domestic semiconductor manufacturing.
As a result
- Major chipmakers, like Intel, TSMC and Samsung are constructing new facilities in the US.
- Taiwan’s TSMC, the world’s No.1 maker of advanced chips, plans to introduce its cutting-edge 2-nanometer process in its Arizona factory.
- Automakers like Ford and GM have announced major long-term supply deals with US chipmaker GlobalFoundries, which is expanding production with $1.5 billion in Chips Act funds.
Additionally, allies Japan and Europe’s investments in chips provide further resilience to the US against geopolitical tensions, which have been rising with China.
Critics raise concerns over subsidy races, wherein countries offer higher benefits, potentially leading to the migration of chip manufacturing to those locations.