In an era of deep partisan divisions, it was perhaps surprising that Congress passed the Chips and Science Act by wide margins—about two to one in the Senate and by more than 50 votes in the House.
However, it is not surprising given the even deeper bipartisan concern about economic and strategic competition from China.
The bill that President Biden is expected to sign into law allows up to $280 billion to be invested over five years — assuming Congress follows through with annual appropriations bills, which is the normal two-party process. Even if there are changes at the edges, the basic direction is set: The federal government will invest a ton of money to revive 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 creates new operations in the United States, as long as it refrains 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 major slide 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 percent in 1990. It’s about 12 percent today and could fall, given China’s continued investment and barring a dramatic turnaround.
Bringing computer chip production back onshore is a big part of what the CHIPS and Science Act aims to accomplish. What has received less attention so far is massive reinvestment in other science and technology research and development. The combination makes the full bill the most significant investment in US industrial policy in decades.
The bill has its roots in the Endless Frontier 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 Khanna, D-Calif., and Rep. Mike Gallagher, R-Wis. This bill went through several name changes and editions along the way, retaining the support of all of the original sponsors except Gallagher. He voted against the CHIPS and Science Act in late July, saying it 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 arrogance. Carefully managed, however, the bill could represent one of the biggest revivals in national R&D since the dawn of the space age.
The bill proposes doubling spending on the National Science Foundation over time, supporting regional technology “hubs” through a competitive process involving researchers and industry, increasing spending on the National Institute of Standards and Technology, and its manufacturing-based programs and increased R&D through the Department of Energy.
Like 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; cyber security? biotechnology; high performance computing; advanced materials; and quantum information science.
Proposals for a regional technology “hub” have already been written in Wisconsin, with thematic areas covering food, water, energy resiliency, manufacturing and overall better use of resources. In short, the subject areas envisioned by the CHIPS and Science Act fit well with Wisconsin’s traditional economic areas.
Proposals for hubs are submitted through the NSF, which has made it clear that proposals that fail to engage industry or broadly address job creation may not make the cut.
The process set in motion by the CHIPS and Science Act will take years to unfold, although competition for semiconductor manufacturing will begin sooner. Major chipmakers such as Intel, GlobalFoundries, Taiwan Semiconductor Manufacturing and Samsung have said they may apply. If so, Wisconsin could once again find itself on a 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.