CHIPS Act Boosts American Semiconductor Manufacturing

CHIPS Act Boosts American Semiconductor Manufacturing

By The Fatty Fish Editorial Team - September 9, 2022

The CHIPS Act, formally the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, is a legislated initiative in the United States aimed at boosting domestic semiconductor manufacturing and addressing the global chip shortage. The main goal of the CHIPS Act, which passed into law in 2022, is to enhance American semiconductor capabilities and reduce dependence on foreign chip manufacturers, particularly in countries such as China. The act authorizes financial incentives and funding to support the construction, expansion, and modernization of semiconductor fabrication facilities in the United States.

Under the CHIPS Act, the federal government allocates significant funds to establish a grant and incentive program to encourage investment in semiconductor research, development, and manufacturing. The Act also establishes a Supply Chain Security Initiative to enhance the security of the semiconductor supply chain and protect against potential threats.

The semiconductor chip shortage, which has been exacerbated by the COVID-19 pandemic, has had widespread impact on various industries, including automotive, consumer electronics, and telecommunications. The CHIPS Act aims to address this shortage by promoting domestic semiconductor production to ensure a stable and secure supply of chips and foster innovation in the semiconductor industry. Here is an opinion piece we found of interest relating to the potential impact of the CHIPS Act on the semiconductor industry.

The Chips Act Is Already a Boon to the U.S.

In the opinion piece for The Washington Post, “The Chips Act is already a boon to the U.S.,” columnist Henry Olsen discusses the semiconductor CHIPS Act and its potential impact on the semiconductor industry. The semiconductor CHIPS Act is bipartisan legislation aimed at strengthening the domestic semiconductor industry in the face of global supply chain challenges. Olsen argues that the Act’s provisions, such as grants and financial incentives, will help bolster US semiconductor manufacturing capacity and reduce reliance on foreign suppliers, particularly in countries such as China.

Olsen reports that already, Intel and Panasonic have announced plans to invest in chip fabrication facilities in Arizona and Oregon, respectively. He commended these initiatives as they will contribute to job creation, technological innovation, and national security. Furthermore, Olsen emphasizes the importance of the semiconductor industry for various sectors, including automotive, healthcare, and telecommunications. He suggests that the semiconductor CHIPS Act and investments by major companies such as Intel and Panasonic will enhance the resilience and competitiveness of the US semiconductor supply chain. It is significant that the semiconductor CHIPS Act has helped to stimulate such major companies as Intel and Panasonic to bolster domestic semiconductor manufacturing, fostering economic growth and reducing dependence on foreign suppliers.

Olsen believes that as a complement to the CHIPS Act, the climate-related measures included in the Inflation Reduction Act, also passed in 2022, will have a similar impact on the production of batteries for the rapidly growing electric vehicle (EV) industry. The legislation provides tax credits of up to $7,500 per EV as an incentive to car buyers, with the catch being that to maximize the credit, the batteries must be manufactured in North America and the essential minerals used in production must originate from either North America or a country with which the US has a free trade agreement. Olsen says that currently, most EV batteries are sourced from China and even those batteries that do not come from China still rely heavily on materials obtained from China. Read the full article in The Washington Post.

Disclosure: Fatty Fish is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

The Fatty Fish Editorial Team

The Fatty Fish Editorial Team includes a diverse group of industry analysts, researchers, and advisors who spend most of their days diving into the most important topics impacting the future of the technology sector. Our team focuses on the potential impact of tech-related IP policy, legislation, regulation, and litigation, along with critical global and geostrategic trends — and delivers content that makes it easier for journalists, lobbyists, and policy makers to understand these issues.