CHIPS and Science Act funding one year after President Biden signed into law makes nearly $53 billion investment in U.S. semiconductor manufacturing, research and development, and workforce. In addition, the law creates a 25 percent tax credit for capital investments in semiconductor manufacturing with the goal of helping to keep America at the forefront of innovation and technological development. While semiconductors were invented in the United States, today the US produces only about 10 percent of global supply and none of the most advanced chips. Likewise, investments in research and development have fallen to less than 1 percent of GDP from 2 percent in the mid-1960s at the peak of the space race. The CHIPS and Science Act aims to change this by driving American competitiveness, making American supply chains more resilient, and supporting US national security and access to key technologies.
Since CHIPS was signed into law, companies have announced over $166 billion in manufacturing in semiconductors and electronics with at least 50 community colleges in 19 states announcing new or expanded programming. The goal is to help American workers access good-paying jobs in the semiconductor industry. In addition, agencies across the federal government have been developing and executing on programs established under CHIPS to encourage domestic semiconductor manufacturing, invest in research and development, and support supply chain resilience and workforce development.
Unlike the investments made in semiconductors, the science and competitiveness investments were only authorized, not appropriated and therefore require additional action. During last year’s Omnibus, Congress did include $1.8 billion in new capital to begin fully funding the CHIPS and Science Act. Here is an opinion piece we found of interest relating to CHIPS and Science Act funding.
Innovation Lightbulb: CHIPS and Science Funding Falling Short
In an opinion piece “Innovation Lightbulb: CHIPS and Science Funding Falling Short” for the Center for Strategic and International Studies, Gregory Arcuri, program coordinator and research assistant and Bailey Crane, research intern, argue that while the $52 billion for chip manufacturing subsidies and related research and development (R&D) initiatives is secure, the “Science” half of CHIPS and Science may fail to have the transformational impact envisioned if it lacks the budgetary follow-through from Congress. The authors point out that the CHIPS and Science Act enjoyed significant bipartisan support when it passed in August 2022, but after compiling legislative data from both the Consolidated Appropriations Act of 2023 and the Fiscal Year (FY) 2024 Presidential Budget Request, the Federation of American Scientists has determined that the funding trajectory for FY 2023-24 shows CHIPS appropriations falling billions of dollars short of authorized levels.
The authors recommend Congress must remember that the US is in the midst of a geopolitical competition in which technology and economic competitiveness will play a decisive role. Beyond scientific cooperation with its allies, the United States must strengthen its science and technology enterprise at home. Over the next year, CHIPS and Science programs will face more political hurdles as Congress negotiates appropriations to avoid a government shutdown this fall and as the United States approaches its next debt ceiling deadline in January 2025. Read the full article on Center for Strategic and International Studies.
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 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.
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