The CHIPS and Science Act of 2022 invests $52.7 billion to strengthen U.S. leadership in semiconductor research, domestic manufacturing, and workforce development. The U.S. currently produces 10% of semiconductors globally, with the Asia-Pacific region producing 75%. Semiconductors form the foundation of every advanced technology, from artificial intelligence to quantum computing. Many view semiconductor production as a national security issue, similar to ensuring a domestic food supply. Operationalizing the CHIPS Act would require onshoring of American manufacturing of semiconductors. Onshoring is the practice of transferring a business operation that was moved overseas back to the country from which it was originally relocated.
What is the CHIPS Act?
The CHIPS Act aims to encourage onshoring of American manufacturing in three main ways:
- U.S. Leadership: The long-term goal of this legislation is to advance U.S. leadership in wireless technologies and their supply chains. U.S. national security priorities include the future of its economic competitiveness globally as well as domestic public investment in research and development.
- Economic Growth: The CHIPS Act invests $10 billion in regional innovation, specifically in technology hubs that enables coordination among state and local governments with higher education as well as labor unions and businesses for the shared goal of technological advancements.
- STEM Development: Science, technology, engineering, and mathematics (STEM) education is essential for workforce development and meeting the demand for high-skilled jobs.
According to the Semiconductor Industry Association, “the share of modern semiconductor manufacturing capacity located in the U.S. has eroded from 37% in 1990 to 12% today.” Additionally, Secretary of Commerce Gina Raimondo said the U.S. will need to triple the number of college graduates in semiconductor-related fields, including engineering. She discussed partnering firms in the semiconductor industry with high schools and community colleges to train over 100,000 new technicians over the next decade. The CHIPS Act strengthens research and development by establishing new regional innovation and technology hubs and investments in all levels of science, technology, engineering, and math education for students. This investment drives opportunity and equity with the diversification of research institutions and students as well as the researchers they serve, such as Historically Black Colleges and Universities (HBCUs) and other historically-underserved institutions. Students have the opportunity to play a crucial role in the future of U.S. leadership in technology.
Arguments Against the CHIPS Act
Opposition to the CHIPS Act is based on the idea that the U.S. government should not interfere in the free-market system. Federal interference may cause unintended disruption and unfair financial advantages for certain companies, while others suffer as a consequence. In addition, some believe the policy is limited in scope, in that it provides too little support for firms that design chips but do not manufacture them. Furthermore, opposition voices in the government object that creating a ‘blank check’ for the profitable microchip industry without guardrails could create a corporate free-for-all that attracts a wide range of businesses interested in obtaining funding. For corporations, the bid for funding is low-risk, high-reward and anything that touches a semiconductor could be eligible. Other opposition voices claim the federal spending generally “fuel[s] inflation that is hurting the poor and middle class.” Opposition voices within the federal government want the funds redirected elsewhere, since the microchip industry is already profitable. In 2021, the global market size was 527.88 billion USD.
