CHIPS and Science Act
The CHIPS and Science Act is a U.S. federal statute enacted by the 117th United States Congress and signed into law by President Joe Biden on August 9, 2022. The act authorizes roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States, for which it appropriates $52.7 billion.
The act includes $39 billion in subsidies for chip manufacturing on U.S. soil along with 25% investment tax credits for costs of manufacturing equipment, and $13 billion for semiconductor research and workforce training, with the dual aim of strengthening American supply chain resilience and countering China. It also invests $174 billion in the overall ecosystem of public sector research in science and technology, advancing human spaceflight, quantum computing, materials science, biotechnology, experimental physics, research security, social and ethical considerations, workforce development and diversity, equity, and inclusion efforts at NASA, NSF, DOE, EDA, and NIST.
The act does not have an official short title as a whole but is divided into three divisions with their own short titles: Division A is the CHIPS Act of 2022 ; Division B is the Research and Development, Competition, and Innovation Act; and Division C is the Supreme Court Security Funding Act of 2022.
By March 2024, analysts estimated that the act incentivized between 25 and 50 separate potential projects, with total projected investments of $160–200 billion and 25,000–45,000 new jobs. However, these projects are faced with delays in receiving grants due to bureaucratic hurdles, shortages of skilled workers, and congressional funding deals that have limited or cut research provisions of the Act by tens of billions of dollars.
History
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.The Endless Frontier Act was initially presented to senators Chuck Schumer and Todd Young by Under Secretary of State Keith Krach in October 2019, as part of the Global Economic Security Strategy to boost investment in high-tech research vital to U.S. national security. The plan was to grow $150 billion in government R&D funding into a $500 billion investment, with matching investments from the private sector and a coalition of technological allies dubbed the "Techno-Democracies-10". On May 27, 2020, Young and Schumer, along with Congressmen Ro Khanna and Mike Gallagher, introduced the bipartisan, bicameral Endless Frontier Act to solidify the United States' leadership in scientific and technological innovation through increased investments in the discovery, creation, and commercialization of technology fields of the future.
The United States Innovation and Competition Act of 2021 , formerly known as the Endless Frontier Act, was United States legislation sponsored by Schumer and Young authorizing $110 billion for basic and advanced technology research over a five-year period. Investment in basic and advanced research, commercialization, and education and training programs in artificial intelligence, semiconductors, quantum computing, advanced communications, biotechnology and advanced energy, amounts to $100 billion. Over $10 billion was authorized for appropriation to designate ten regional technology hubs and create a supply chain crisis-response program.
The CHIPS for America Act portion stemmed from Krach and his team brokering the $12 billion on-shoring of TSMC to secure the supply chain of sophisticated semiconductors, on May 15, 2020. Krach's stated strategy was to use the TSMC announcement as a stimulus for fortifying a trusted supply chain by attracting TSMC's broad ecosystem of suppliers; persuading other chip companies to produce in U.S., especially Intel and Samsung; inspiring universities to develop engineering curricula focused on semiconductor manufacturing and designing a bipartisan bill to provide the necessary funding. This led to Krach and his team's close collaboration in creating the CHIPS for America component with senators John Cornyn and Mark Warner. In June 2020, Senator Warner joined U.S. senator John Cornyn in introducing the $52 billion CHIPS for America Act. Elements of the Bioeconomy Research and Development Act of 2021 were also included.
Both bills were eventually merged into the U.S. Innovation and Competition Act. On June 8, 2021, the USICA passed 68–32 in the Senate with bipartisan support. The House version of the Bill, America COMPETES Act of 2022, passed on February 4, 2022. The Senate passed an amended bill by substituting the text of H.R. 4521 with the text of the USICA on March 28, 2022. A Senate and House conference was required to reconcile the differences, which resulted in the bipartisan CHIPS and Science Act, or "CHIPS Plus". The bill passed the U.S. Senate by a vote of 64–33 on July 27, 2022. On July 28, the $280 billion bill passed the U.S. House by a vote of 243–187–1. On August 1, 2022, the magazine EE Times dubbed Under Secretary of State Keith Krach the architect of the CHIPS and Science Act. The bill was signed into law by President Joe Biden on August 9, 2022.
Background and provisions
The law constitutes an industrial policy initiative which takes place against the background of a perceived AI Cold War between the US and China, as artificial intelligence technology relies on semiconductors. The law was considered amidst a global semiconductor shortage and intended to provide subsidies and tax credits to chip makers with operations in the United States. The U.S. Department of Commerce was granted the power to allocate funds based on companies' willingness to sustain research, build facilities, and train new workers.For semiconductor and telecommunications purposes, the CHIPS Act designates roughly $106 billion. The CHIPS Act includes $39 billion in tax benefits, loan guarantees and grants, administered by the DOC to encourage American companies to build new chip manufacturing plants in the U.S. Additionally, $11 billion would go toward advanced semiconductor research and development, separable into $8.5 billion of that total going to the National Institute for Standards and Technology, $500 million to Manufacturing USA, and $2 billion to a new public research hub called the National Semiconductor Technology Center. $24 billion would go to a new 25 percent advanced semiconductor manufacturing tax credit to encourage firms to stay in the United States, and $200 million would go to the National Science Foundation to resolve short-term labor supply issues.
According to McKinsey, "The CHIPS Act allocates $2 billion to the Department of Defense to fund microelectronics research, fabrication, and workforce training. An additional $500 million goes to the Department of State to coordinate with foreign-government partners on semiconductor supply chain security. And $1.5 billion funds the USA Telecommunications Act of 2020, which aims to enhance competitiveness of software and hardware supply chains of open RAN 5G networks." Companies are subjected to a 10-year ban prohibiting them from producing chips more advanced than 28 nanometers in China and Russia if they are awarded subsidies under the law.
The law authorizes $174 billion for uses other than semiconductor and telecom technologies. It authorizes, but does not appropriate, extended NASA funding for the International Space Station to 2030, partially funds the Artemis program returning humans to the Moon, and directs NASA to establish a Moon to Mars Program Office for a human mission to Mars beyond the Artemis program. The law also obligates NASA to perform research into further domesticating its supply chains and diversifying and developing its workforce, reducing the environmental effects of aviation, integrating unmanned aerial vehicle detection with air traffic control, investigating nuclear propulsion for spacecraft, continuing the search for extraterrestrial intelligence and xenology efforts, and boosting astronomical surveys for Near-Earth objects including the NEO Surveyor project.
The law could potentially invest $67 billion in accelerating advanced zero-emissions technologies to mass markets, advancing building efficiency, and improving climate science research, according to the climate action think tank Rocky Mountain Institute. The law would invest $81 billion in the NSF, including new money for STEM education and defense against foreign intellectual property infringement, and $20 billion in the new Directorate for Technology, Innovation, and Partnerships, which would be tasked with deploying the above technologies as well as promoting social and ethical considerations, and authorizes but does not appropriate $12 billion for ARPA-E. For the United States Department of Energy the law creates a new 501 organization, the Foundation for Energy Security and Innovation, to leverage philanthropy for improving the workforce and bolstering energy research. It contains annual DOE budget increases for other purposes including supercomputer, nuclear fusion and particle accelerator research as well as minority-serving institution outreach and workforce development for teachers, and directs the DOC to establish $10 billion worth of research hubs in post-industrial rural and urban communities that have been subjected to historical underinvestment.
As a national security law, the law contains a variety of provisions related to research ethics, foreign talent recruitment, restrictions on Confucius Institutes, and establishing new research security initiatives in the DOE, NIST, and the NSF.
The law makes extensive recommendations to the NSF to add social, legal, and ethical considerations to the award process in all of its research activities, hinting at an embrace of public participatory technology assessment; the law does not invoke an NSF doctrine called the "broader impacts criterion" to do so. The law invests roughly $90 billion in strengthening and diversifying the STEM workforce through 33 programs, many of them incorporated deeply in the aforementioned semiconductor incentive, NSF labor supply, Tech Hubs, and DoD microelectronics R&D efforts; beyond those, the law authorizes $2.8 billion for standalone education projects, creates a Chief Diversity Officer position and codifies the Eddie Bernice Johnson INCLUDES Network to serve as the NSF's main diversity, equity, and inclusion program. The law expands NSF demographic data collection and workplace inclusion efforts, and help to grantees in caregiver roles and the fight against sexual harassment. The law emphasizes skilled technical jobs that do not require a bachelor's degree, and directs grant applicants to closely integrate workforce initiatives with job training; notably, it does not invest in the United States Department of Labor to carry this out.