At a time of deep partisan divisions, it was perhaps surprising that Congress passed the CHIPS and Science Act by a wide margin — roughly two to one in the Senate and more than 50 votes in the House of Representatives.
This is less surprising, however, given the even deeper bipartisan concerns over economic and strategic competition from China.
The bill, which President Biden is expected to sign into law, will allow investments of up to $280 billion over five years – provided Congress follows annual budget bills, which is the normal two-part process. While there are changes on the fringes, the core direction is set: The federal government will invest a lot of money in reviving the semiconductor chip industry in the United States.
The bill provides around $54 billion in subsidies and tax credits to any global chipmaker that expands or sets up new operations in the United States, so long as it has at least a decade of investment in advanced technologies in “countries of importance” like China refrains .
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It’s a move aimed at countering America’s long decline in computer chip development and production. The US share of such chips, used in everything from cars to fighter jets to artificial intelligence, was 37% in 1990. It’s around 12% today and could fall given continued Chinese investment and barring a dramatic turnaround.
Bringing computer chip manufacturing back to shore is a big part of what the CHIPS and Science Act wants to achieve. What has received less attention so far is the massive reinvestment in other scientific and technological research and development. The combination makes the accounts the most significant investment in US industrial policy in decades.
The bill’s roots lie in the Endless Frontier Act, introduced in 2020 by bipartisan sponsors including Senate Majority Leader Chuck Schumer, DN.Y., Sen. Todd Young, R-Ind., Rep. Ro Khanna, D- Calif., and Rep. Mike Gallagher, R-Wis. This bill went through several name changes and versions along the way, maintaining support from all of the original sponsors except Gallagher. He voted against the CHIPS and Science Law in late July, saying it was not “laser-focused on the challenge we face from the Chinese Communist Party.”
That may be true from a national security perspective, and no one should want the CHIPS and Science Act to become a candy. But with careful management, the bill could represent one of the biggest revivals in national research and development since the dawn of the space age.
The bill would double spending on the National Science Foundation over time, support regional technology “hubs” through a competitive process involving researchers and industry, increase spending on the National Institute of Standards and Technology and increase its manufacturing-based programs; and increase R&D through the Department of Energy.
As with the original Endless Frontier Act, spending in this part of the bill would focus on advanced energy and industrial efficiency technologies; artificial intelligence and machine learning; advanced manufacturing; Internet security; Biotechnology; high-performance computing; advanced materials; and quantum computing.
Proposals for regional technology “hubs” are already being written in Wisconsin, with themes covering food, water, energy resilience, manufacturing and better resource use in general. In short, the subject areas contemplated by the CHIPS and Science Act align fairly well with Wisconsin’s traditional economic sectors.
The hub proposals are submitted through the NSF, which has made it clear that proposals that do not engage industry or address job creation more broadly may not be considered.
The process set in motion by the CHIPS and Science Act will take years to unfold, although competition for semiconductor production will begin sooner. Major chipmakers including Intel, GlobalFoundries, Taiwan Semiconductor Manufacturing and Samsung have signaled they may apply. If so, Wisconsin could find itself back on a shortlist for landing a chip manufacturing facility.
Over time, it will also be worth watching as the rest of the bill forces Wisconsin researchers, industry and others to work together.