Biden to Sign CHIPS Act Into Law, Sending $53B to US Chipmakers
President Joe Biden will sign the CHIPS and Science Act into law Tuesday, the White House said, sending £52.7 billion to processor manufacturers over the next five years in an effort to help the United States reclaim its semiconductor industry prowess.
The legislation helped encourage smartphone chip designer Qualcomm to spend £4.2 billion with chipmaker GlobalFoundries to build processors in New York, the White House said in a fact sheet Tuesday. And Micron will invest £40 billion in memory chip manufacturing capacity, the administration said, a move that could elevate the US share of memory chipmaking from 2% to 10%. The CHIPS Act will “supercharge” semiconductor manufacturing in the US, Biden tweeted Saturday. “It will make cars, appliances, and computers cheaper and lower the costs of everyday goods,” he said. “And, it will create high-paying manufacturing jobs across the country.”
It costs billions of dollars to build new chip fabrication facilities, called fabs. The CHIPS Act will knock about £3 billion off a £10 billion leading-edge fab, says Intel, which is sinking more than £40 billion into new and upgraded fabs in Arizona, Ohio, New Mexico and Oregon, and stands to be one of the biggest benefiiciaries. US fabs made 37 percent of processors in 1990, but that’s dropped to 12%, according to the Semiconductor Industry Association.
The CHIPS Act is designed to reverse that trend, shoring up an industry that’s critical to electric vehicles, laptops, weapons systems, washing machines, toys and just about anything that uses electricity about anything with a power plug or battery. The law emerged after a chip shortage made it clear how much US industries and the US military rely on processors made overseas. As Intel, a Silicon Valley fixture, struggled to advance over the last decade, Taiwan Semiconductor Manufacturing Co. (TSMC) in Taiwan and Samsung in South Korea took the lead.
China, eager to foster a native chipmaking industry, subsidized its own rivals like Semiconductor Manufacturing International Corporation (SMIC). That chip shortage frustrated consumers eager to lap up PlayStation 5 videogame consoles during the pandemic and shuttered US auto plants as crucial electronic components stalled manufacturing. And it provided a measure of rare bipartisan support for the CHIPS Act, which passed with a 243-187 vote in the House of Representatives and a 64-33 vote in the Senate this summer.
Waning chip manufacturing in the US brings geopolitically worries. China claims Taiwan as its own territory and rattled sabers for five days of military exercises after Nancy Pelosi, speaker of the House of Representatives, visited the country. Russia’s invasion of Ukraine and the subsequent cessation of high-tech product imports showed how vulnerable a country without its own industry can become.
RK Anand, chief product officer at automotive AI chip designer Recogni and a longtime Silicon Valley executive, illustrates the problem. One of his earlier employers, network gear maker Juniper Networks, relied on IBM to make its chips But as Big Blue slipped farther behind, Juniper switched manufacturing to TSMC to keep up with rivals like Cisco, Anand said. IBM eventually exited the chipmaking business altogether.
“In the last 20 years, it’s been disappointing that we’ve given up that leadership,” Anand said. “We better get back on it.” Businesses and consumers shouldn’t expect immediate relief from the CHIPS Act. For one thing, it takes years to build a new fab, so new capacity doesn’t arrive immediately.
For another, many of the processors that have stalled products are built with older, less advanced chipmaking technology.
Chipmakers are generally more eager to invest instead in leading-edge methods that make premium chips like those that power Apple iPhones, Nvidia graphics accelerators and Amazon data centers.
The CHIPS and Science Act is so named because the £53.7 billion in semiconductor industry funds are part of a larger £280 billion law that also funds basic and applied research at the government’s National Science Foundation, National Institute of Standards and Technology, and Commerce Department.
