The road ahead for the CHIPS and Science Act

01 January 2023
Jennifer O'Bryan

On 9 August 2022, US President Joseph Biden signed into law the CHIPS and Science Act to support research, development, and manufacturing of semiconductor chips in the US. This massive surge of federal funding for science and technology totals more than $52 billion. The law also might be seen as an historic foray into industrial policymaking by the US government, which, in recent years at least, has often been a charged political issue.

Some have reported the CHIPS and Science Act price tag to include authorized funding, which would bring the total cost to hundreds of billions of taxpayer dollars. Although the authorized funds are arguably equally important in setting the future of US technology development—and in turn its economic and national security—that money will not be available unless Congress makes the appropriations through its regular yearly funding of the government.

Authorization bills that call for large increases in federal spending have not fared well in the past. Amid concern that the US was falling behind in science and technology, the 2007 America COMPETES Act and its successor, the America COMPETES Reauthorization Act of 2010, called for a doubling of science funding at key agencies. However, the appropriations never came close to matching the calls for increased funding.

Now, with last year’s CHIPS and Science Act, Congress passed another authorization bill that calls for a near doubling of the budgets for the National Science Foundation (NSF), Department of Energy (DOE), and National Institute of Standards and Technology (NIST). Though the bill garnered enough bipartisan support to reach Biden’s desk, far fewer Republicans than Democrats supported it.

It’s worth unwrapping, then, what parts of the CHIPS and Science Act have a green light and which might be stymied if the 118th Congress is not able to muster the kind of bipartisan support needed to turn funding authorizations from last year into real money appropriated this year and in years to come.

CHIPS for America Fund

Most of the $50 billion appropriated so far goes towards the CHIPS for America Fund, which includes $39 billion for a manufacturing incentives program. Within the incentives program, $2 billion is set aside for so-called legacy chips, or mature nodes with priority placed on critical industries, such as the automotive industry. Up to $6 billion can be used for loans and loan guarantees. This is significant for the optics and photonics community because suppliers of semiconductor manufacturing equipment and materials are eligible to receive funds.

The Act calls for the consideration of a broad range of semiconductors. It also includes provisions to help ensure that funding recipients meet commitments to diversity and inclusion. What’s more, companies that receive CHIPS Act funds for manufacturing more advanced semiconductors must commit to a 10-year period during which they may not build or expand facilities in countries that present a US national security threat. 

Research and development are also prioritized through funding in the amount of $11 billion over five years. These funds will be used to establish a National Semiconductor Technology Center (NSTC), a National Advanced Packaging Manufacturing Program (NAPM), up to three Manufacturing USA Semiconductor Institutes, and research and development at NIST in semiconductor microelectronic metrology. Funding for these activities will vary, largely at the discretion of NIST. NIST has said that the NSTC and NAPM will host fab capabilities as well as a full suite of flexible prototyping tools available to all to ensure we are investing in a broad range of technologies, including new materials and novel designs. This will come along with complementary funding streams. How exactly these programs will be shaped will be highly influenced by public input, including the focus of the Manufacturing USA institutes. A request for information was issued in the Federal Register in October looking for this input with a 28 November 2022 close date for comments..

Requests for proposals for the CHIPS for America Fund will be released by the Biden Administration in early February and will provide specific application guidance. Applicants should expect awards to be made on a rolling basis. General eligibility guidance can be found in the implementation guidance released on 19 September 2022. That document, as well as the latest announcements regarding the CHIPS for America Fund, is available at the site.

CHIPS for America funds can be paired with an Advanced Manufacturing Investment Credit, a 25 percent tax credit for investments in semiconductor manufacturing. It includes incentives both for semiconductor fabrication as well as for the manufacturing of specialized tooling equipment required to make semiconductors.

CHIPS for Defense Fund

Two billion dollars over five years is provided for the CHIPS for Defense Fund. This money goes to support a Department of Defense lab-to-fab program called the Microelectronics Commons. It provides for the expansion of core facilities and regional hubs to supply domestic semiconductor manufacturing for military needs.

Regional technology hubs will be established on a competitive basis, with each focusing on one of six application areas including: secure edge/internet of things computing; 5g/6g technology; artificial intelligence hardware; quantum technology; electronic warfare; and commercial leap-ahead technologies.

Workforce Challenges Abound

According to the Semiconductor Industry Association, an estimated 240,000 new workers will be needed as the US looks to expand domestic semiconductor manufacturing and research. The CHIPS Act provides $200 million over five years for the NSF to promote growth of the semiconductor workforce. NIST also has funding to establish workforce development programs. Even with these new funding streams and programs, however, creative solutions are needed to find and train enough new workers for the domestic semiconductor industry workforce.

International Investment and Collaboration

China has invested $250 billion in its domestic chip manufacturing capacity. The EU has committed €30 to €50 billion to spur chip production in Europe. Japan passed chips subsidies in the amount of $6.8 billion. South Korea has added tax credits and subsidies for its domestic chips industry, and India has committed $30 billion.

The Act also provides $500 million for a CHIPS for America International Technology Security and Innovation Fund. Money is allocated over a five-year period to the US State Department, in coordination with other government agencies, to prevent the escalation of a chips race by coordinating with allies on our approach to programs.

Science Authorizations

So, as the 118th Congress gets under way, the parties will be tested as to whether they can reach an agreement and appropriate the funds necessary to fully realize what the CHIPS and Science Act promises. Republicans who wish to be seen as reining in government spending could sway consensus on moving forward. Democrats, too, will need to place funding these authorized programs high on their list of priorities. It will be up to everyone in government, industry, and academia to make the case not to repeat the errors of the past and, instead, invest heavily in the nation’s future by meeting the funding goals passed in the CHIPS and Science Act in fiscal year 2024 and beyond.

Jennifer O’Bryan is the SPIE Director of Government Affairs.

Learn more about SPIE advocacy

Recent News
Sign in to read the full article
Create a free SPIE account to get access to
premium articles and original research