Bipartisan CHIPS and Science Act Now on the Books

(KNSI) — A bipartisan bill to bolster the manufacturing of semiconductors in the United States is now on the books.

The Creating Helpful Incentives to Produce Semiconductors, or CHIPS and Science Act, includes $53 billion for the domestic production of semiconductors, which are in pretty much everything people use today. The U.S. produces just 12% of the world’s semiconductors, which Minnesota Senator Tina Smith tells KNSI is “a big problem,” especially when it comes to national security as the military and intelligence communities were calling on Congress to pass the bill. “If we’re all relying on chips that are made by China or Chinese-controlled companies, that gives us pause about the security of those chips.”

The money will also help bring manufacturing jobs back to the U.S. because “it’s very good for us to stay on the cutting edge of the technology innovations that are also happening. Chips are, of course, improving all the time, and the next generation of semiconductor chips, which we need for national security. We don’t make any of those in the United States. They’re all made in Asia, and that is just too big of a risk for us to take.”

She says chip manufacturing companies were waiting for the bill to pass to decide where to locate their multibillion-dollar factories. More domestic companies creating semiconductors also means less disruption in the supply chain for the chips.

According to the U.S. Department of Commerce, “The semiconductor shortage has been described as due to a ‘perfect storm’ of factors. Prior to 2020, there were already difficulties in obtaining inputs for production, including semiconductor manufacturing equipment used to make older varieties of chips, and components used in electronic assembly such as diodes, capacitors, and substrates. There was also an underlying growth in demand for chips as industries shifted to more semiconductor-intensive products (e.g., electric vehicles, 5G). The pandemic exacerbated these trends by dramatically increasing demand for products that require semiconductors of all types. Simultaneously, supply was disrupted by a series of black swan events such as factory fires, winter storms, energy shortages, and COVID-19-related shutdowns.”

Smith says companies such as Medtronic, Boston Scientific, and the University of Minnesota can all benefit from the funding as “significant research dollars flow through to big institutions, which is another part of the legislation.” There is $11 billion in the measure allocated over five years for general research and development.

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