President Joe Biden recently highlighted the significance of the CHIPS and Science Act, emphasizing that it represents a substantial increase in research and development investment for the United States. This legislation, a key achievement for the Biden administration, received bipartisan support when it passed through Congress in the summer of 2022.
The primary objective of the CHIPS Act is to enhance domestic semiconductor chip manufacturing in the US. Despite the country's previous leadership in the industry, the US currently only produces approximately 10% of the global chip supply, lacking the most advanced chip varieties crucial for technologies like artificial intelligence.
Under the CHIPS Act, around $39 billion will be allocated to companies involved in constructing, expanding, or modernizing chip facilities within the US. Additionally, some eligible companies will have access to tax credits to support their endeavors.
While the Department of Commerce has received 600 initial applications for grant funding, only three awards have been announced thus far, totaling nearly $2 billion. These grants are expected to benefit facilities operated by GlobalFoundries in New York and Vermont, Microchip Technology in Colorado and Oregon, and Bae Systems in New Hampshire. The chips produced at these plants play a critical role in various sectors such as automotive, medical devices, and defense systems.
Commerce Secretary Gina Raimondo has acknowledged that the funding available under the CHIPS Act is insufficient to accommodate all applicants. Nevertheless, even before the government has distributed any of the authorized funds, the legislation has already stimulated private investments in the semiconductor industry.
