What is the CHIPS Act?

The $52 billion Creating Helpful Incentives to Produce Semiconductors for America Act, or CHIPS Act, was signed by President Biden in August. The Act includes $39 billion in tax benefits and other incentives to encourage companies to build new chip manufacturing plants in the US.

The Act will unlock hundreds of billions more in private sector semiconductor investment across the country, including production essential to national defense and critical sectors. 

Semiconductors rank as the nation’s fifth largest export, and US companies represent seven of the top 10 global chipmakers by market cap. China is the largest producer of semiconductors, accounting for 24% of the world’s production. 

Will the Act help with Semiconductor Supply Chain Issues?

Over half of the money is to be used to re-shore production of logic and memory devices while some of the funds will be used to re-shore production of lower-tech chips used in cars, communications, medical devices, and defense products. 

The goal of the Act is to focus on federal aid to encourage the construction of microprocessor manufacturing facilities in the US. If it meets its goal, the Act should help reduce current US issues with semiconductor supply chains.

The worldwide semiconductor market is expected to increase 13.9 percent in 2022, continuing to grow by 4.6 percent in 2023, according to the World Semiconductor Trade Statistics.