How to ensure America’s big bet on chips pays off

One year ago, on the sun-drenched South Lawn of the White House, President Biden signed into law the CHIPS and Science Act. That stroke of the pen marked the culmination of a years-long bipartisan effort to reinvigorate U.S. semiconductor production and innovation—and the start of America’s big experiment in industrial policy. Now, with CHIPS on the pathway to delivering massive benefits for our country, it’s critical for leaders in Washington to advance policies that enhance this historic accomplishment.

In an era of sharp political division in Washington, CHIPS brought together leaders from across the political spectrum, united by the goal of reinforcing America’s economic and national security, bulking up its supply chains of essential chip-enabled products, and advancing its technological prowess relative to China and other global competitors. The resulting package provides $52 billion for semiconductor manufacturing incentives and research initiatives.

Although none of that funding has been distributed yet, the early returns are promising. In anticipation of CHIPS incentives, companies in the semiconductor ecosystem have already announced new projects in America totaling more than $200 billion in private investments. These projects will create more than 40,000 direct jobs and support hundreds of thousands of additional jobs throughout the U.S. economy. And they’ll help ensure America is home to more of the chip manufacturing, design and research that will define our country’s place in the world well into the future.

Still, to ensure CHIPS reaches its full potential, more work remains. There are three core actions policymakers can take to help ensure CHIPS is a resounding success in the decades to come.

First, we must ensure implementation of this landmark law continues in an effective and speedy manner. Leaders in Washington — and especially at the Commerce Department — have made great strides putting in place the CHIPS programs that will make America home to more of the world’s semiconductor manufacturing and research.

In addition to the dozens of companies that have already announced semiconductor projects in America, many more are exploring doing the same. The process for applying for and receiving funds should remain focused on being clear, concise and collaborative.

Effective implementation of CHIPS research and development provisions is equally important. CHIPS promised the launch of landmark semiconductor research and development entities, including the National Semiconductor Technology Center (NSTC) and the National Advanced Packaging Manufacturing Program (NAPMP).

Research and development efforts initiated by these entities should continue to be carried out in close consultation with industry experts and aimed at bridging key gaps in the current semiconductor research and development ecosystem. And the broader and bigger investments in basic scientific research that were authorized by CHIPS should be fully funded through congressional appropriations.

Second, we must broaden the pipeline of talent to fill tech jobs in the semiconductor industry and throughout the economy. The increase in domestic chip manufacturing and innovation in the years ahead is projected to intensify the already-burgeoning semiconductor workforce shortage. It is hard to overstate the criticality of stepping up to address this problem. In fact, America faces a shortage of 67,000 technicians, computer scientists, and engineers in the semiconductor industry by 2030, as well as a gap of 1.4 million such workers throughout the broader U.S. economy. 

The U.S. semiconductor industry has, for decades, engaged in programs to recruit, train, and employ a diverse and skilled workforce, and companies are redoubling workforce development efforts in the aftermath of CHIPS enactment. But to help fully bridge the gap, government leaders must advance policies that build on our industry’s longstanding workforce development efforts, expand the pipeline of STEM graduates in America, and retain and attract more of the top engineering students from around the world.

Third, we must ensure the semiconductor industry has open access to global markets. Central to this is to effectively manage U.S.-China trade tensions and allow the chip industry to have continued access to the Chinese market for sales of commodity chips that do not pose risks to U.S. national security. Strong economic and national security require a strong U.S. semiconductor industry.

Overly broad and unilateral restrictions risk diminishing the U.S. semiconductor industry’s competitiveness, disrupting supply chains, causing significant market uncertainty, and prompting continued escalatory retaliation by China. Any future restrictions, if necessary, should be narrow and clearly defined, consistently applied, and fully coordinated with allies.

By enacting the CHIPS and Science Act one year ago, leaders in Washington rose to a defining challenge of our time. They seized an historic opportunity to fortify American semiconductor manufacturing, design, and research, and delivered a big win for our country.

Now, it’s time to expeditiously advance policies that will maximize the new law’s impact and unleash the full potential of semiconductor innovation for many years to come.

John Neuffer is president and CEO of the Semiconductor Industry Association in Washington.