Two years ago, President Biden signed the CHIPS and Science Act (CHIPS) into law, marking a significant step toward revitalising the United States’ semiconductor manufacturing capabilities.
This legislation aimed to restore the nation’s leadership in the semiconductor industry, fortify global supply chains, and enhance both national and economic security. Although America once produced nearly 40% of the world’s chips, the country’s share had dwindled to about 10% by the time the CHIPS Act was enacted, with no production of the most advanced chips. The CHIPS Act sought to reverse this trend by allocating nearly $53 billion for US semiconductor manufacturing, research and development, and workforce initiatives.
The CHIPS Act has catalysed nearly $400 billion in semiconductor investments across the US, largely driven by the Department of Commerce’s CHIPS Incentives programme. This programme has entered into preliminary agreements with 15 companies across 15 states, committing over $30 billion in direct funding and approximately $25 billion in loans for semiconductor manufacturing projects. These efforts are expected to generate more than 115,000 direct construction and manufacturing jobs, with additional investments in workforce development and training ensuring that these new semiconductor jobs are filled by American workers. As a result, the US is on track to produce nearly 30% of the global supply of leading-edge chips by 2032, a significant increase from the zero percent production level when the Biden-Harris Administration took office.
Beyond manufacturing, the CHIPS Act has also supported regional innovation and development through initiatives like the Tech Hubs and Recompete programmes. These investments aim to create centres of innovation across the country and revitalise communities that have historically been overlooked by federal investment. Additionally, the Act is making substantial investments in research, development, and workforce initiatives within the semiconductor ecosystem.
Progress over two years in semiconductor manufacturing and innovation
Over the past two years, federal agencies have implemented various programmes under the CHIPS Act to restore domestic semiconductor manufacturing, invest in research and development, strengthen supply chain resilience, and boost national security and economic development. Key milestones in this effort include:
Reshoring US semiconductor manufacturing
- The Department of Commerce’s CHIPS Incentives Programme has reached preliminary agreements with 15 companies, allocating over $30 billion of the $39 billion in direct incentives provided by the CHIPS and Science Act. All remaining funds are expected to be distributed by the end of 2024
- The US has transitioned from producing none of the world’s most advanced chips to hosting all five of the world’s leading-edge logic, memory, and advanced packaging providers. By 2032, these facilities will enable the US to produce nearly 30% of the global supply of leading-edge chips
- The CHIPS Act is fostering a robust semiconductor ecosystem by supporting the establishment of advanced packaging facilities, expanding production of mature-node semiconductors, and securing critical supply chain components to support industries such as automotive, medical devices, AI, and aerospace
- The Department of the Treasury is finalising a rule on the Advanced Manufacturing Investment Credit, which provides a 25% investment tax credit for semiconductor manufacturing and related equipment production
Advancing US leadership in semiconductor innovation
As the birthplace of the semiconductor, the United States has long been a leader in research and development in this field. The CHIPS Act is reinforcing this leadership by:
- Investing approximately $3 billion in the National Advanced Packaging Manufacturing Programme (NAPMP) to establish and accelerate domestic capacity for semiconductor advanced packaging. This will bolster US technological leadership in leading-edge semiconductors and support future innovation areas, including AI. Over 100 concept papers were submitted for the first funding opportunity, with a second opportunity for $1.6 billion set to be announced in the autumn.
- Establishing Natcast, a non-profit organisation to operate the NSTC and enable rapid adoption of innovations that will enhance US competitiveness for decades. The Department of Commerce, in collaboration with Natcast, announced the focus of its first three CHIPS R&D research facilities: the NSTC Prototyping and National Advanced Packaging Manufacturing Program facility, an NSTC Administrative and Design facility, and an NSTC Extreme Ultraviolet (EUV) centre. These facilities will be complemented by affiliated technical centres.
- Issuing funding opportunities for a first-of-its-kind Manufacturing USA Institute focused on the development, validation, and use of digital twins – virtual models that replicate the structure, context, and behaviour of physical counterparts.
The CHIPS and Science Act has set the stage for a new era of US leadership in semiconductor manufacturing and innovation, ensuring that America remains at the forefront of this critical industry.
