Chips & Science Act: Impact after 1 year on US Semiconductor Industry.

The CHIPS and Science Act combines two bipartisan bills: the Endless Frontier Act, designed to boost investment in domestic high-tech research, and the CHIPS for America Act, designed to bring semiconductor manufacturing back to the U.S. The act is aimed at competing with China as per wikipedia,

The modern world stands on the backbone of technology, with semiconductors playing a central role. As vital components in everything from our smartphones to our defense systems, semiconductors are not only imperative for technological advancement but also for national security. However, the U.S., once a dominant player in the semiconductor realm, now finds its leadership teetering on the brink.

The CHIPS and Science Act establishes a semiconductor investment  tax credit of approximately $24 billion to spur private investment  until January 1, 2027.

Key highlights:

  • Semiconductors are vital to the U.S. economy, national security, and technological leadership.
  • U.S. leadership in this sector is at risk due to heavy investments from global competitors in semiconductor research and their domestic industries.
  • Federally funded research in the U.S. has remained stagnant for years.
  • The U.S.'s share in commercial semiconductor manufacturing has reduced from 37% in 1990 to 12% in the present.
  • Costs for establishing and operating a semiconductor fabrication unit in the U.S. are 25-50% higher than in other countries.
  • There are gaps and vulnerabilities in the U.S. semiconductor supply chain.

The Solution:

  • The CHIPS & Science Act of 2022 offers a comprehensive policy to uphold U.S. leadership in semiconductors.
    • Allocating $52 billion for manufacturing grants and research.
    • Introducing a 25% investment tax credit to promote semiconductor manufacturing in the U.S.
    • These measures combined will rejuvenate U.S. semiconductor manufacturing, fortify the supply chain, and enhance national security.The To counter foreign subsidies and address supply chain issues, the CHIPS Act of 2022 should be passed. 

The Declining Dominance of U.S. Semiconductors

The United States makes 12 percent of the world’s semiconductors, compared with 37 percent in the 1990s, according to US government statistics.

Fast forward to today, and this figure has alarmingly plummeted to 12%. This decline isn't a mere coincidence. Over the years, global competitors have massively invested in their domestic semiconductor industries, with their governments offering enticing incentives. As a result, the U.S. semiconductor industry has faced stagnation in federally funded research. Furthermore, manufacturing a semiconductor in the U.S. has become 25-50% more expensive than in competitor nations, making the U.S. less attractive for such investments.

Semiconductor shortages have been a key aspect of global supply chain pressures over the past 18 months.

The CHIPS & Science Act: A Beacon of Hope

Amidst these challenges emerges the CHIPS Act of 2022, a proposed legislation aiming to revive the U.S. semiconductor industry. The act not only recognizes the pressing challenges but also offers tangible solutions:

  • A whopping $52 billion is earmarked for manufacturing grants and pivotal research in the semiconductor sector.
  • To make the U.S. a more appealing destination for semiconductor enterprises, a 25% investment tax credit is proposed.

These combined measures are poised to infuse new life into the U.S. semiconductor sector, bolstering its global position.

Why This Matters?

For those pondering the significance of this act and the industry it seeks to protect, consider this: semiconductors are integral to our daily lives, powering devices we rely upon every day. Moreover, they are critical cogs in the machinery of the U.S. economy and play a pivotal role in national security.

What is the impact of CHIPS & Science Act:

Many companies and ecosystem suppliers have announced investment plans since May 2020, when TSMC announced that it would build a fab in Arizon(before the act passed on August 9, 2022)

  • July 2021: GlobalFoundries announced a $1 billion investment to construct a new semiconductor fab in Upstate New York.

  • November 2021: Samsung unveiled plans for a $17 billion semiconductor factory set to commence operations in the second half of 2024, marking the largest foreign direct investment ever in Texas.

  • January 2022: Intel made an initial $20 billion investment, resulting in the creation of 3,000 jobs, representing the largest investment in Ohio's history. Intel also revealed plans to expand this investment to a total of $100 billion across eight fabrication plants.

  • May 2022: Purdue University launched the first comprehensive semiconductor degree program in the United States in anticipation of the CHIPS Act, aiming to generate employment opportunities for 50,000 trained semiconductor engineers.

  • May 2022: Texas Instruments initiated construction on new 300-mm semiconductor wafer fabrication plants in Sherman, Texas, with a projected investment of up to $30 billion and the potential to create as many as 3,000 jobs.

After one year since law has passed:

  • September 2022: Wolfspeed revealed plans for constructing the world's largest silicon carbide semiconductor plant in Chatham County, North Carolina. By 2030, it aims to occupy over one million square feet of manufacturing space spread across 445 acres, with an estimated cost of $1.3 billion. The initial development phase received approximately $1 billion in incentives from state, county, and local governments, and the company intends to seek funding through the CHIPS Act.
  • October 2022: Micron Technology announced a $20 billion investment in a new chip factory located in Clay, New York, leveraging subsidies provided by the CHIPS Act. The company also signaled potential expansion of investments up to $100 billion over two decades. New York State granted Micron $5.5 billion in tax credits as an incentive, contingent on meeting employment commitments.
  • December 2022: TSMC (Taiwan Semiconductor Manufacturing Company) announced the inauguration of its second chip plant in Arizona, increasing its investments in the state from $12 billion to $40 billion. The company highlighted that construction costs in the U.S. were significantly higher (four to five times) than in Taiwan due to labor costs, bureaucratic procedures, and training expenses. Consequently, it was projected that manufacturing a TSMC chip in the United States would incur at least a 50% higher cost compared to Taiwan.
  • February 2023: Texas Instruments unveiled an $11 billion investment plan for a new 300-mm wafer fabrication facility in Lehi, Utah.
  • February 2023: Integra Technologies proposed a $1.8 billion expansion of their Outsourced Semiconductor Assembly and Test (OSAT) operations in Wichita, Kansas.
  • February 2023: EMP Shield announced a $1.9 billion proposal for a new campus in Burlington, Kansas.
  • April 2023: Bosch disclosed its acquisition of TSI Semiconductors and an investment of $1.5 billion in upgrades focused on producing silicon carbide chips at the TSI plant in Roseville, California.
  • June 2023: French company Mersen, a subsidiary of Le Carbone Lorraine, outlined an $81 million expansion project in Bay City and Greenville, Michigan, prompted by Michigan's implementation of the CHIPS Act.


The CHIPS Act of 2022 is more than just a piece of legislation; it's a clarion call for the U.S. to reclaim its leadership in the semiconductor arena. By recognising the challenges and offering substantial solutions, the act underscores the undeniable importance of semiconductors in today's world. As the debate around the act continues, it remains to be seen how the U.S. will navigate this crucial juncture in the global tech landscape.

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