Industrial Policy Returns: The CHIPS Act
Tracking the deployment of $52.7 billion in federal subsidies to onshore advanced semiconductor manufacturing.
Signed into law in August 2022, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act represents the most significant federal intervention in US industrial capacity since the Cold War. It appropriates $52.7 billion specifically for American semiconductor research, development, manufacturing, and workforce development.
Appropriation Breakdown
- $39.0B Manufacturing Incentives (Direct grants)
- $11.0B R&D and Workforce (NSTC, NAPMP)
- $2.0B Legacy Chips (Defense / Auto supply chain)
- $0.5B International Technology Security
* Also includes a 25% investment tax credit for manufacturing equipment and construction.
The Geopolitical Imperative
In 1990, the US produced 37% of the global semiconductor supply. Today, that number is roughly 12%. More critically, 0% of the world's most advanced logic chips (under 5 nanometers) are manufactured on US soil—production is entirely concentrated in Taiwan (TSMC) and South Korea (Samsung).
The CHIPS Act treats this supply chain vulnerability as a Tier 1 national security threat. The explicit goal of the legislation is to establish a secure, domestic supply of leading-edge nodes required for AI, defense systems, and high-performance computing.
Major Preliminary Awards (2024)
The Department of Commerce has begun issuing Preliminary Memoranda of Terms (PMTs) to major foundries. These are highly structured agreements contingent on rigorous due diligence, environmental reviews, and private capital matching.
| Company | Location(s) | Direct Funding | Total CapEx Planned |
|---|---|---|---|
| Intel | AZ, OH, NM, OR | $8.5 Billion | $100+ Billion |
| TSMC | Phoenix, AZ | $6.6 Billion | $65 Billion |
| Samsung | Taylor, TX | $6.4 Billion | $40+ Billion |
| Micron | NY, ID | $6.1 Billion | $100+ Billion |
Labor and Structural Bottlenecks
Appropriating capital does not build fabs. The US currently faces a severe shortage of the specialized construction trades (pipefitters, electricians capable of cleanroom specs) and electrical engineering talent required to operate these facilities.
Furthermore, the National Environmental Policy Act (NEPA) requires extensive reviews for new fab construction, leading to timeline risks. While the Building Chips in America Act aims to streamline these requirements, permitting delays remain a core risk to the 2030 domestic production targets.