The United States’ Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS Act) completes one year as a law today (August 9). The Act authorises $52.7 billion over five years to boost American competitiveness, innovation and national security in semiconductors.
While the jury is still out on the long-term effectiveness of the Act, what is important from an Indian perspective is to observe and learn from its implementation. As industrial policy has become a default policy of choice for nation-states, the Act provides a clear window into the capabilities and structures needed to execute such policies. While it may neither be possible nor desirable to replicate specific provisions, we outline four lessons to help India execute its semiconductor strategy better.
The Act involves cooperation and coordination between several arms of the government. Four separate funds have been created for the execution of the Act. The Department of Commerce is the lead agency administering the $50 billion CHIPS for America Fund for accelerating semiconductor manufacturing and research. But there are also allocations for the Department of Defense ($2 billion) for defence-unique technologies, the Department of State ($0.5 billion) to coordinate with foreign partners on semiconductor supply chain security, and the National Science Foundation ($0.2 billion) to promote the growth of the semiconductor workforce. This structure highlights the priority accorded to semiconductors.
