President Joe Biden’s signature on The CHIPS and Science Act has paved the way to provide $52.7 billion (AED193.4 billion) in subsidies for American semiconductor production and research and help mitigate the growing threat of China and Taiwan’s dominance in an industry that is becoming critical in almost every aspect of life.
Calling the measure “a once-in-a-generation investment in America itself”, Biden, who just came out of isolation after testing positive for COVID-19, said: “The future is going to be made in America.
“We are better positioned than any other nation in the world to win the competition for the 21st century. The CHIPS and Science Act supercharges our efforts to make semiconductors here in America. America invented the semiconductor, and this law brings it back home.”
The signing ceremony on the White House lawn was attended by chief executives of Micron, Intel, Lockheed Martin, HP and Advanced Micro Devices.
The White House said the bill’s passage was spurring new investments, with Micron announcing a $40 billion commitment to chip manufacturing that would boost US market share from 2 percent to 10 percent and create almost 40,000 new jobs.
Also, Qualcomm agreed to buy an additional $4.2 billion in semiconductor chips from GlobalFoundries’ (which is owned by the Abu Dhabi-based Mubadala) New York factory, bringing its total commitment to $7.4 billion in purchases through 2028.
US fabs made 37 percent of processors in 1990, but that’s dropped to 12 percent, according to the Semiconductor Industry Association, and the new Act aims to reverse the trend.
Only 10 percent of the world’s semiconductors, which are crucial to the manufacture of automobiles, appliances and even defense systems, are currently made in the US, with East Asia producing 75 percent of the world’s supply.
Biden noted the United States needs chips for key weapons systems like Javelin missiles. “It’s no wonder the Chinese Communist Party actively lobbied US business against this bill,” he added.
The law was mooted after the supply chain disruptions following the first wave of COVID-19 led to a chip shortage and several industries were impacted. It led to shutdowns in several automobile factories, and shortages in phones, gaming consoles and other electronic equipment.
The shortage also provided a measure of rare bipartisan support for the CHIPS Act, which passed with a 243-187 vote in the House of Representatives and a 64-33 vote in the Senate in late July.
The CHIPS and Science Act provides $52.7 billion for American semiconductor research, development, manufacturing, and workforce development.
This includes $39 billion in manufacturing incentives, including $2 billion for the legacy chips used in automobiles and defence systems, $13.2 billion in R&D and workforce development, and $500 million to provide for international information communications technology security and semiconductor supply chain activities.
It also provides a 25 percent investment tax credit for capital expenses for manufacturing of semiconductors and related equipment.
These incentives are expected to secure domestic supply, create tens of thousands of good-paying, union construction jobs and thousands more high-skilled manufacturing jobs, and catalyse hundreds of billions more in private investment.
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