
Sens. Maria Cantwell (D-WA) and Patty Murray (D-WA) visited a semiconductor manufacturing facility in Washington state on Aug. 17. (Image credit – Senate Commerce Committee)
Sens. Maria Cantwell (D-WA) and Patty Murray (D-WA) visited a semiconductor manufacturing facility in Washington state on Aug. 17. (Image credit – Senate Commerce Committee)
The newly signed CHIPS and Science Act
Of the new law’s total appropriation, $39 billion is allocated over five years to encourage semiconductor manufacturers to finance U.S.-based fabrication equipment and facilities, or “fabs.” It also supplements that money with a tax credit that was not included in the original CHIPS law. In addition, it allocates $11 billion to the Department of Commerce for a set of new R&D programs, and $2 billion to the Department of Defense to create a National Network for Microelectronics R&D.
Federal agencies are now deliberating over how to implement the initiatives, and companies and state officials are already jockeying to win shares of the funds. Stakeholders are also considering what follow-on steps are necessary to ensure the law achieves its aims, with workforce issues, particularly immigration reform, emerging as a focus for intense advocacy.
Concerns have been mounting in recent years about the concentration of semiconductor manufacturing in Asia, especially Taiwan. Enticed by promises of support from federal and local governments, over the past two years several companies announced plans for new fabs in existing chip-manufacturing centers such as Arizona and Texas, and in new regions, including a major complex Intel intends to build near Columbus, Ohio.
Cutting-edge fabs are extremely expensive, requiring highly advanced manufacturing equipment and a specialized workforce. Policymakers hope the act’s financial incentives will compete with those offered by other nations and encourage companies to further scale up their U.S. investments.
Intel’s initial commitment
These companies will be able to use the new tax credit created by the act to reimburse 25% of qualified investments in facilities that start construction by the beginning of 2027. The Congressional Budget Office estimates
Companies will have to compete for the act’s subsidies, and the Commerce Department is currently working with
The act does outline eligible uses of the funds, which broadly include financing of U.S.-based facilities and equipment for “semiconductor fabrication, assembly, testing, advanced packaging, or research and development.” The funds can specifically be used to pay for “construction, expansion, or modernization” of such facilities and equipment, associated workforce development efforts, and certain operations costs, including “specialized workforce, essential materials, and complex equipment maintenance.” The Commerce Department can also use a portion of the funds for loans and loan guarantees.
The subsidies come with some constraints, including a requirement that companies cannot claim them if they expand their advanced manufacturing activities in “countries of concern,” notably China. While China is arguing
In line with such aims, the CHIPS and Science Act is also providing
Sen. John Cornyn (R-TX) and Rep. Michael McCaul (R-TX) met with representatives from the semiconductor industry and the University of Texas at an event in April to discuss a proposal to create a Texas Institute of Electronics. (Image credit – Office of Sen. Cornyn)
Much remains to be decided about how the act’s R&D initiatives will be structured.
The National Semiconductor Technology Center (NSTC) the Commerce Department is tasked with launching will be a public-private consortium that will conduct research and prototyping of advanced semiconductor technology, support workforce-training programs, and maintain an investment fund to help startup companies commercialize new technologies. NIST is also directed to establish a National Advanced Packaging Manufacturing Program (NAPMP) for developing new ways of encasing semiconductors within integrated circuits, to expand in-house R&D relevant to microelectronics, and to establish up to three Manufacturing USA institutes dedicated to microelectronics.
For fiscal year 2022, the act allocates $2 billion for NSTC, $2.5 billion for NAPMP, and $500 million for the remaining activities. These programs will receive an additional $6 billion total in the subsequent four years, and the Commerce Department is granted discretion on how to split that money between them with no time limit on when it must be spent.
Lead sponsors of the CHIPS Act have been mobilizing coalitions to convince the department to locate the NSTC and NAPMP in their states. As early as last summer, Senate Majority Leader Chuck Schumer (D-NY) was pitching the Albany NanoTech Complex to Commerce Secretary Gina Raimondo, observing
However, the R&D activities will not necessarily be concentrated in a single location, and stakeholders have offered various visions for the NSTC and other CHIPS Act programs. Earlier this year, the Commerce Department received over 200 responses
The President’s Council of Advisors on Science and Technology also plans to weigh in on the act’s implementation in a forthcoming report
That echoes sentiments expressed by Intel CEO Pat Gelsinger at a public meeting
Gelsinger estimated there is “probably 80% agreement on the outlines for the NSTC,” but anticipated there will be “some vicious arguments on some fine points of governance structure.” He recommended that it take the form of a “set of nationwide hubs that are placed with U.S. companies and other facilities that leverage existing infrastructures,” noting that Intel has offered to host a hub focused on advanced lithography and potentially a second on advanced packaging technology.
Attesting to NSTC’s importance, Gelsinger observed that maintaining manufacturing capacity in the semiconductor sector is directly tied to ongoing R&D, including at universities and startup companies. “When every new fab module is $10 billion and has to be backed up by many billions of dollars of R&D, that is a yearly investment,” he remarked. “On many of the more advanced technology requirements, research efforts, that’s where I see things like NSTC being so powerful, [to] keep that R&D engine, the talent engine, the startup engine alive.”
Semiconductor Industry Association CEO John Neuffer also weighed in on the NSTC and NAPMP at the meeting, arguing they should be industry-led, leverage existing industrial facilities, and focus on prototyping and piloting activities
PCAST previewed its report in a letter
The DOD-funded National Network for Microelectronics R&D the CHIPS Act created is tasked with transitioning R&D innovations into workable technologies. Among its other goals, it is directed to “enable cost-effective exploration of new materials, devices, and architectures, and prototyping in domestic facilities to safeguard domestic intellectual property.”
Former Defense Advanced Research Projects Agency Director Victoria Coleman has been a champion of the network concept, referring to it as a “microelectronics commons.” Explaining its motivation in an interview
How the DOD network will be structured and relate to the NSTC also remains to be seen. In its annual defense policy legislation
Semiconductor manufacturers have increasingly raised alarms about workforce shortages, which are likely to be exacerbated as companies create thousands of jobs in response to the influx of CHIPS funding.
To help address the issue, the CHIPS and Science Act provides $200 million over five years to the National Science Foundation for workforce development activities, including creation of a National Network for Microelectronics Education. The network will support curriculum development, shared training infrastructure, public outreach, and regional partnerships between associate- and bachelor-degree institutions, labor groups, and industry.
Industry players are calling for stronger action. For example, the trade association SEMI and the American Semiconductor Academy have just released a report
The industry is also pushing for immigration reforms
The National Science Board reports
In July, a group of nine human resources executives at semiconductor companies sent a letter