In an era 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 by more than 50 votes in the House.
This is less surprising, however, given the even deeper bipartisan concern about economic and strategic competition from China.
The bill, which President Biden is expected to sign into law, authorizes the investment of up to $280 billion over five years — assuming Congress follows annual appropriations bills, the normal two-part process. Even if there are changes around the edges, the main direction is set: The federal government will invest a lot of money in revitalizing the semiconductor chip industry in the United States.
The bill contains about $54 billion in subsidies and tax credits for any global chipmaker that expands or sets up new operations in the United States, as long as they refrain from investing in advanced technology in “countries of concern” such as China for at least a decade.
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It’s a move aimed at countering a long decline in US computer chip development and production. The U.S. share of such chips, used in everything from cars to fighter jets to artificial intelligence, was 37% in 1990. Today, it’s about 12% and could fall given China’s continued investment and barring a dramatic turnaround .
Bringing computer chip manufacturing back to shore is a big part of what the CHIPS and Science Act aims to accomplish. What has so far attracted less attention is the massive reinvestment in other scientific and technological research and development. The combination makes the entire bill the most significant investment in US industrial policy in decades.
The bill has its roots in the “Infinite Borders Act,” which was introduced in 2020 by bipartisan sponsors that included Senate Majority Leader Chuck Schumer, D-N.Y., Sen. Todd Young, R-Ind., Rep. Ro Hanna, D- California, and Congressman Mike Gallagher, R-Wis. This bill went through several name changes and versions along the way, maintaining the support of all the original sponsors except Gallagher. He voted against the CHIPS and Science Act in late July, saying he was not “laser-focused on the challenge we face from the Chinese Communist Party.”
This may be true from a national security perspective, and no one should want the CHIPS and Science Act to turn into insanity. Carefully managed, however, the bill could represent one of the biggest revivals in national research and development since the dawn of the space age.
The bill proposes to 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 its manufacturing-based programs , and increasing R&D through the Department of Energy.
Like the original Infinite Frontiers Act, spending in this part of the bill would focus on advanced technologies for energy and industrial efficiency; artificial intelligence and machine learning; advanced manufacturing; cyber protection; biotechnology; high performance computing; modern materials; and quantum information science.
Proposals for a regional technology “hub” are already being written in Wisconsin with topic areas that touch on food, water, energy sustainability, manufacturing and overall better use of resources. In summary, the subject areas covered by the CHIPS and Science Act align quite well with Wisconsin’s traditional economic sectors.
Proposals for the center are submitted through the NSF, which has made it clear that proposals that fail to engage industry or deal broadly with job creation may not be successful.
The process set in motion by the CHIPS and Science Act will take years to develop, although competition for semiconductor manufacturing will begin sooner. Major chipmakers such as Intel, GlobalFoundries, Taiwan Semiconductor Manufacturing and Samsung have signaled they may apply. If so, Wisconsin could once again find itself on the short list to land a chip manufacturing facility.
Over time, it will also be worth watching to see how the rest of the bill forces Wisconsin researchers, industry and others to work together.