How will the CHIPS and Science Act Help Counter China?

­The passage of the gargantuan Inflation Reduction Act has overshadowed a more modest piece of legislation that’s more directly relevant to our industry, and I’d like to take a look at the latter — the Creating Helpful Incentives to Produce Semiconductors for America Act (aka, the CHIPS and Science Act).

With the goal of countering China’s semiconductor dominance, the bipartisan CHIPS and Science Act will funnel approximately $54.2 billion in supplemental funding into the semiconductor and wireless industry.

And for good reason. 

In the 1990s, 37% of worldwide semiconductor manufacturing occurred in the U.S., while today, it’s down to a mere 10-12%, depending on the source.

Meanwhile, total U.S. R&D spending as a percentage of GDP has fallen from 4th in the world in the ‘90s to 9th today, behind countries like South Korea, Japan, and Germany.

While 7 of the 10 largest semiconductor companies in the world — including #1, Intel — are based in the U.S., America, itself, lags far behind the global leader in semiconductor production, China (with 24% of overall production).

To counter those worrying stats, the CHIPS and Science Act amounts to what’s allegedly “the largest five-year investment in public R&D in the nation’s history.”

At the outset, it earmarks $39 billion to build, expand, or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packaging, or research and development. $2 billion of that is specifically for “mature semiconductors.”

In a separate move, $11 will go towards DOC Research and Development, including DOC Microelectronics Metrology R&D, the DOC Manufacturing USA Semiconductor Institute, the DOC National Advanced Packaging Manufacturing Program, and the DOC National Semiconductor Technology Center (NSTC).

Amongst other things, the NSTC is a public-private partnership to conduct advanced semiconductor manufacturing R&D and prototyping, invest in new tech, and expand workforce training.

There’s also $2 billion for the DoD to implement the Microelectronics Commons (a national network for onshore, university-based prototyping, lab-to-fab transition of semiconductor technologies), $500 million for the CHIPS for America International Technology Security and Innovation Fund, and $1.5 billion for the Public Wireless Supply Chain Innovation Fund.

But what I’m especially interested in is the $200 million for the National Science Foundation to help “kick start development of the domestic semiconductor workforce,” however that works.

The U.S. has dealt with a long-term shortage in the educational STEM fields, and that’s undoubtedly led directly to critical holes in the high-tech workforce.

According to Commerce Secretary Gina Raimondo, "This program is intended to be an investment in America's long-term economic and national security, and we will take the necessary steps to ensure its success."