President Biden signs $52bn CHIPS Act into law

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President Biden signs $52bn CHIPS Act into law

By Molly Burgess2022-08-10T10:33:00+01:00 President Joe Biden has signed the ‘historic’ $52bn CHIPS Act into law to place the US as a forerunner in the semiconductor market and revitalise domestic manufacturing.The US President on Thursday (9th August) implemented the industrial strategy that sets aside funding for new semiconductor programmes, including $39bn for a grant programme available to semiconductor [...]

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By Molly Burgess2022-08-10T10:33:00+01:00

President Joe Biden has signed the ‘historic’ $52bn CHIPS Act into law to place the US as a forerunner in the semiconductor market and revitalise domestic manufacturing.

The US President on Thursday (9th August) implemented the industrial strategy that sets aside funding for new semiconductor programmes, including $39bn for a grant programme available to semiconductor manufacturers as well as equipment and materials suppliers.

Further to the above, the Act also includes $2bn for the legacy chips used in automobiles and defence systems, $13.2bn in R&D and workforce development and $500m to provide for international information communications technology security and semiconductor supply chain activities.

As gasworld heard last month an exclusive interview with Caroline Metcalf-Vera, Government Affairs at Electronic Fluorocarbons, the Act could have seen the semiconductor supply chain benefit from $5bn of new capital.

Read more: Exclusive: US semi supply chain at risk, major investment and support required

Progress for the CHIPS Act comes as the US semiconductor is witnessing unprecedented demands and strained supply chains. According to the US Department of Commerce, demand for semiconductors in the US was as much as 17% higher in 2021 than it was in 2019.

Adding to the above strains, the majority of on-stream semiconductor manufacturing facilities are operating at or above 90% utilisation, meaning there is limited additional supply to bring online without building facilities.

Making the US a leader in the semiconductor space once again

As outlined by a statement released by the White House, the US invented the semiconductor, but today produces about 10% of the world’s supply—and none of the most advanced chips. Instead, the world now relies on East Asia for 75% of global production.

“The law will also ensure the US maintains and advances its scientific and technological edge.”

Hoping to boost the US’ position in the market, President Biden said, “The CHIPS and Science Act will unlock hundreds of billions more in private sector semiconductor investment across the country, including production essential to national defence and critical sectors. 

“The law will also ensure the US maintains and advances its scientific and technological edge.”

Whilst the Act is undoubtably a huge leap for the semiconductor space, US Senator Mark Warner last month (July 22) said there is still a lot more work to be done in order to boost US competitiveness with China.

According to a 2021 report released by SEMI, the industry association serving the global electronics design and manufacturing supply chain, the US share of the global semiconductor manufacturing capacity has eroded from 37% in 1990 to 12% today.

One of the identified reasons for this market decline is due to other countries’ government investing ambitiously in chip manufacturing incentives, while the US didn’t follow suit and therefore witnessed a steep decline in the market.

The same report also highlighted the three-quarters of the world’s chip manufacturing capacity is now concentrated in East Asia, with China projected to command the largest share of global production by 2030, due to government investments.

“It’s been more than two years since I first began sounding the alarm about the need to reduce our reliance on other nations and safeguard our national security by bringing semiconductor production back to the US,” Warner said. 

“Since then, we’ve seen the consequences of semiconductor shortages all the way up the supply chain and down to consumers who have faced rising costs across goods – from vehicles to electronics.”

“While we still have a lot of work to do to boost US competitiveness with China, the Senate passage pf this legislation represents an important step in bringing back American manufacturing, shoring up US innovation and reducing costs for families.”

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Industry reaction

Welcoming the CHIPS Act being signed into law, Keith Krach, former Under Secretary of State and Chairman of the Krach Institute for Tech Diplomacy at Purdue, said, “This is a big day for America – for national security, our global economic security, and our long-term prosperity. The investment will create thousands of jobs across the entire supply chain and create a broad ripple effect of technical training and know-how throughout the tech ecosystem.”

“The CHIPS and Science Act will help US tech companies build, expand, and modernise domestic facilities and equipment…”

“Our adversaries, starting with the Chinese Communist Party, are playing a game of four-dimensional military, economic, diplomatic, and cultural chess, and the crossroads and the main battlefield is technology. The CHIPS and Science Act will help US tech companies build, expand, and modernise domestic facilities and equipment for semiconductor production and accelerate research in AI, quantum computing, 6G, hypersonics, and other national security technologies.”

“General Secretary Xi Jinping is propping up China’s semiconductor manufacturing by committing $1 trillion over the next 10 years. He is terrified that the US will commit to the equivalent of a moon-shot. The bipartisan CHIPS and Science Act may do exactly that, taking the technological advantage away from China Inc. and returning it to the US.”

Governor Kathy Hochul also welcomed Biden’s signing. In a statement, she said, “Today is a great day for the United States — and for the State of New York. By signing the CHIPS and Science Act, President Biden will kick-start the most significant opportunity in our nation’s history to create jobs and economic growth through an expansion of semiconductor manufacturing, research and development within our borders.”

“Thanks to the efforts of Majority Leader Schumer and our New York Congressional delegation, this new bipartisan law will have a major impact in New York. New York is poised to serve our nation and the world with its semiconductor needs, while strengthening our state’s economy, revitalising communities and bringing thousands of high-tech jobs all across the state.”

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Helium impact

Though the largest end-uses of helium include liquid helium for magnetic resonance imaging (MRI) manufacturing and service and gaseous helium for lifting applications (balloons, airships), helium demand for semiconductor production is expected to grow ~6% per year over the next three years from 2022 to 2024.

That’s according to analysis performed by TECHCET CA LLC, cited by Intelligas Consulting’s Maura D. Garvey in her exclusive 2022 worldwide helium market report for gasworld US Edition’s August issue.

Helium demand for semiconductor continued to grow throughout the pandemic, and is heating up this year. Strong growth is also expected over the next several years, with plans for new fabs in the US and Europe. This has been emboldened through the aforementioned CHIPS Acts, and Garvey’s analysis notes that ‘We just need to have the helium supply to support this growth’.

That’s not the only question mark the Acts provide. According to Lita Shon-Roy, CEO of TECHCET CA LLC, “Once fully approved by Congress, the CHIPS Act will buoy up the market, allowing for further growth in the midst of recession worries. However, the question remains, ‘Will there be set asides in the CHIPS Act for materials production and R&D?’ This will be highly dependent on US policymakers and their interpretation of what is and is not needed to strengthen US’ position in semiconductor technology and manufacturing.”

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