CHIPS Act

Overview

Semiconductors are tiny electronic devices based primarily on silicon or germanium that are fundamental to nearly all modern industrial and national security activities. They are also essential building blocks of other emerging technologies, such as artificial intelligence, autonomous systems, 5G communications and quantum computing. 

The U.S. semiconductor industry has historically dominated many parts of the international semiconductor supply chain, such as R&D, chip design and manufacturing, and semiconductors are a top U.S. export. Yet the U.S. position within the semiconductor industry has been declining. In 1990, the U.S. accounted for around 40% of global semiconductor fabrication capacity. By 2019, that number had dropped to about 11%.

To help strengthen the U.S. position in semiconductor research, development and manufacturing, Congress authorized a set of programs known as the Creating Helpful Incentives to Produce Semiconductors for America (CHIPS) as part of the William M. (Mac) Thornberry National Defense Authorization Act (NDAA) for Fiscal Year 2021 (Pub. L. No. 116-283). 

These programs seek to restore U.S. leadership in semiconductor manufacturing by providing incentives and encouraging investment to expand the domestic manufacturing capacity necessary to produce the most advanced semiconductors needed for applications in AI and high-performance computing, as well as less advanced semiconductors that remain critical components of everything from automobiles to microwave ovens. 

The programs would also grow the research and innovation ecosystem for microelectronics and semiconductor R&D in the U.S., including through the establishment of new collaborative partnerships and facilities that will address a critical gap in the U.S. innovation ecosystem. These efforts would provide access to the prototyping and manufacturing equipment necessary to transition research advances more seamlessly into manufacturing.

Investments in R&D and manufacturing made via the CHIPS programs will focus on the following goals:

• Protect and extend U.S. technology leadership;
• Secure U.S. supply for critical sectors; and
• Promote long-term economic viability of the U.S. semiconductor industry — including in R&D, manufacturing and other critical parts of the supply chain.

Funding

President Joe Biden’s American Jobs Plan calls for $50 billion over five years to fund this set of programs, and Congress is considering legislation with similar funding levels over the same time period.

Roughly $40 billion would be directed toward the construction or modernization of U.S. facilities for semiconductor fabrication, assembly, testing, advanced packaging or R&D. Funding would be applied to supporting multiple market segments and to meet the semiconductor needs of critical sectors, including both commercial requirements as well as those of the Department of Defense and broader intelligence community.

Another $10B would support critical R&D and infrastructure investments to help protect and extend U.S. technological leadership, including:

• The establishment of a National Semiconductor Technology Center (NSTC), a hub of talent, knowledge, equipment and tool sets that will foster research into new materials, architectures, processes, devices and applications and — most importantly — bridge the gap within the United States between public and private sector R&D and commercialization. (See the Decadal plan.) 
• The establishment of an Advanced Packaging Manufacturing Program to strengthen semiconductor advanced test, assembly and packaging capability in the domestic ecosystem.
• The establishment of one or more Manufacturing USA institutes targeting the manufacturing R&D needs of the semiconductor industry.
• Increased investment and expansion of NIST’s metrology R&D in support of semiconductor and microelectronics R&D. 

Planning for CHIPS 

NIST is working closely with the Office of the Secretary to plan for the implementation of the Department of Commerce’s CHIPS Act programs, and is planning accordingly. Our efforts include developing program requirements and areas of focus, determining the structure and staffing needs of a new program office, planning for accelerated recruitment and identification of required new staff, and ensuring sufficient grants management and acquisition resources are available.  

NIST’s internal activities are part of a broader government approach with multiple coordinated efforts. The National Security Council is coordinating multiple task forces to advance and coordinate interagency efforts to ensure alignment and collaboration across agencies. The Department of Commerce, with leadership from the Office of the Secretary and NIST, is ensuring coordination across all relevant bureaus, including the International Trade Administration, the Bureau of Industry and Security and the Economic Development Administration.  

An Industrial Advisory Committee will provide advice to the secretary of commerce on domestic microelectronics R&D and manufacturing.