CHIPS and Science Act

CHIPS and Science Act
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Shorttitle	CHIPS and Science Act
Longtitle	An act to provide for the implementation of the recommendations of the National Security Commission on Artificial Intelligence, to authorize appropriations for the National Science Foundation, the Department of Energy, and the National Institute of Standards and Technology, and for other purposes.
Enacted by	117th United States Congress
Effective date	August 9, 2022
Cite public law	Public Law 117-167
Introducedin	House
Introducedby	Eddie Bernice Johnson (D–TX-30)
Introduceddate	February 4, 2021
Passedbody1	House
Passeddate1	February 4, 2022
Passedvote1	222–210
Passedbody2	Senate
Passeddate2	March 28, 2022
Passedvote2	68–28
Agreedbody3	House
Agreeddate3	July 28, 2022
Agreedvote3	243–187
Agreedbody4	Senate
Agreeddate4	July 27, 2022
Agreedvote4	64–33
Signedpresident	Joe Biden
Signeddate	August 9, 2022

CHIPS and Science Act is a major piece of United States federal law enacted in 2022 to bolster domestic technological and industrial competitiveness. It provides substantial funding and incentives for semiconductor manufacturing and research while authorizing significant investments across the nation's scientific enterprise. The legislation aims to reduce reliance on foreign supply chains, particularly from Taiwan and South Korea, and counter the technological advancements of strategic competitors like the People's Republic of China.

Background and legislative history

The impetus for this legislation stemmed from growing bipartisan concern over the fragility of global semiconductor supply chains, starkly revealed during the COVID-19 pandemic. Leaders in the United States Senate, including Chuck Schumer and Todd Young, had previously championed the Endless Frontier Act, which laid much of the foundational policy. Concurrently, the House Committee on Science, Space and Technology, under Chairwoman Eddie Bernice Johnson, advanced complementary research and development provisions. These efforts coalesced amid intense competition with the Chinese Communist Party and following advocacy from industry groups like the Semiconductor Industry Association. The final bill, a compromise between the House and Senate versions, was passed with support from both Democrats and Republicans and signed into law by President Joe Biden at a ceremony attended by executives from Intel and Micron Technology.

Provisions and funding

The act's financial core is over $52 billion in incentives for domestic semiconductor fabrication, including $39 billion in manufacturing grants administered by the Department of Commerce and a 25% investment tax credit. A separate $11 billion is allocated to the National Science Foundation for establishing the Directorate for Technology, Innovation and Partnerships and advancing research in critical fields like artificial intelligence and quantum computing. The National Institute of Standards and Technology receives funding for its Manufacturing USA network and semiconductor metrology. Furthermore, the Department of Energy's Office of Science and the National Aeronautics and Space Administration are authorized for significant budget increases to support foundational research.

Goals and intended impacts

Primary objectives include reshoring advanced semiconductor production, currently dominated by Taiwan Semiconductor Manufacturing Company and Samsung Electronics, to enhance economic and national security. The law seeks to create regional innovation hubs across the United States, leveraging institutions like the Massachusetts Institute of Technology and Purdue University, to prevent a "brain drain" and spread technological economic benefits. A long-term goal is to establish U.S. leadership in next-generation technologies, ensuring dominance over rivals like the People's Liberation Army and securing advantages for future systems from the Department of Defense to the National Institutes of Health.

Implementation and administration

The Commerce Department's CHIPS Program Office, led by officials like Michael Schmidt, oversees the distribution of manufacturing incentives, requiring recipients to refrain from significant expansion in China for a decade. The National Science Foundation is tasked with standing up its new technology directorate under the leadership of Director Sethuraman Panchanathan. Implementation involves coordination with agencies like the State Department for international alliances, such as the Chip 4 alliance with Japan and the Netherlands, and with the Department of Labor to develop workforce training programs aligned with the needs of companies like GlobalFoundries and Texas Instruments.

Reactions and analysis

The act received praise from industry leaders, including the CEOs of Advanced Micro Devices and IBM, and from governors in states like Ohio and Arizona anticipating major investments from Intel and Taiwan Semiconductor Manufacturing Company. Some economists, including those from the Peterson Institute for International Economics, have cautioned about the high costs and market distortions of industrial policy. Members of Congress, including Senator Bernie Sanders, criticized the lack of strong conditions protecting workers and taxpayers. Observers note the strategic response from the European Union, which advanced its own European Chips Act, and continued challenges from the People's Republic of China, which views the law as containment.