The CHIPS and Science Act is a United States federal law, signed by President Joe Biden on 9 August 2022, that authorises roughly 280 billion US dollars to strengthen American semiconductor manufacturing and scientific research. About 52.7 billion dollars of that is appropriated directly for semiconductors: manufacturing incentives, research and development, and workforce programmes. A 25% investment tax credit for chip manufacturing comes on top. This post, first written in February 2023, explains what the act contains and why it was passed.
Key takeaways
- Signed into law on 9 August 2022, enacted by the 117th United States Congress.
- About 280 billion dollars in total authorised funding, most of it for science and research programmes.
- About 52.7 billion dollars appropriated for semiconductors, including 39 billion for manufacturing incentives and 11 billion for research and development.
- A 25% advanced manufacturing investment tax credit, estimated at about 24 billion dollars.
- A central aim is to rebuild US chip manufacturing and compete with China in critical technology.
What the act is
The CHIPS and Science Act is a federal statute enacted by the 117th United States Congress and signed into law by President Joe Biden on 9 August 2022. It aims to strengthen domestic research and manufacturing of semiconductors by providing approximately 280 billion dollars in funding. Of this, about 52.7 billion dollars is set aside for semiconductor manufacturing, research and workforce development, and a much larger sum, reported as about 174 billion dollars, is authorised for wider scientific research and innovation. A primary objective is to counter China's growing strength in this area and reduce US reliance on chips made overseas.
The act is divided into three divisions, each with its own short title:
- Division A: the CHIPS Act of 2022 (the semiconductor funding and incentives).
- Division B: the Research and Development, Competition, and Innovation Act (science agencies, technology hubs and research programmes).
- Division C: the Supreme Court Security Funding Act of 2022.
Where the semiconductor money goes
| Programme | Approximate amount (US dollars) | Purpose |
|---|---|---|
| CHIPS manufacturing incentives (Department of Commerce) | 39 billion | Grants, loans and loan guarantees for fabs and related facilities |
| CHIPS research and development | 11 billion | National Semiconductor Technology Center, advanced packaging programme, NIST metrology and Manufacturing USA institutes |
| Department of Defense | 2 billion | Microelectronics research, prototyping and workforce |
| Wireless supply chain innovation | 1.5 billion | Open and interoperable radio access network (open RAN) technology |
| International technology security | 0.5 billion | Supply chain partnerships with allied countries (Department of State) |
| Workforce and education | 0.2 billion | National Science Foundation workforce programmes |
| Advanced manufacturing investment tax credit | 25% credit, about 24 billion estimated | Tax credit on investment in chip manufacturing equipment and facilities |
The direct appropriations add up to about 52.7 billion dollars. Companies that receive CHIPS manufacturing funds accept conditions, including limits on expanding advanced manufacturing in countries of concern, such as China, for a period of years.
Why it was passed
The US share of global chip manufacturing capacity had fallen to roughly 12%, according to widely cited SIA and Boston Consulting Group analysis, from about 37% in 1990. Leading-edge logic production was concentrated in Taiwan and South Korea. The chip shortages of 2020 to 2022, which halted car production lines, made that dependence visible to policymakers. The act responds with incentives large enough to change where companies build their next fabs, plus research funding to keep the US competitive in design, packaging and process technology.
Early industry response
As a result of the expected passage of the act, chip suppliers committed to or announced more than 300 billion dollars in investments and job creation in the United States, according to industry and government statements at the time. These announcements included new or expanded fabs from companies such as Intel, TSMC, Samsung and Micron.
What happened next (dated update)
Added later: in 2024 the Department of Commerce announced and then finalised several large awards, among them TSMC (6.6 billion dollars), Intel (reduced to about 7.86 billion dollars when finalised in November 2024), Micron (about 6.1 billion dollars) and Samsung. In 2025 the new administration changed parts of the programme, including moves affecting Natcast, the non-profit set up to run the National Semiconductor Technology Center. Award amounts and programme details have continued to change, so check the Department of Commerce CHIPS pages for the current position.
FAQ
How much money does the CHIPS and Science Act provide for chips?
About 52.7 billion dollars in direct appropriations for semiconductors, plus a 25% investment tax credit estimated at about 24 billion dollars.
Is the 280 billion dollars all for semiconductors?
No. Most of the total is authorised for wider science and research programmes, and authorisation is not the same as money actually appropriated by Congress.
Who runs the CHIPS programme?
The Department of Commerce, through the CHIPS Program Office for manufacturing incentives and the CHIPS R&D Office (with NIST) for research.
Read more: McKinsey, The CHIPS and Science Act: Here's what's in it >>
Good introduction article.
ReplyDelete