CHIPS bill is a win for region’s innovation economy
By James T. Brett
The act will make significant strides to address the shortage of semiconductors and increase domestic capacity
RESEARCH & DEVELOPMENT
After nearly two years and multiple iterations, Congress passed and President Biden signed a sweeping piece of bipartisan legislation aimed at bolstering domestic semiconductor manufacturing, as well as making key investments in research and development.
The New England Council was proud to support the “CHIPS and Science Act,” and we believe that its passage is a huge win for the New England innovation economy.
First and foremost, this new law makes over $50 billion in investments to bolster the U.S. semiconductor manufacturing industry. Over the past several years, our nation has experienced a critical shortage of semiconductor chips.
The shortage is the result of a perfect storm of circumstances, including a variety of supply chain constraints, combined with an increased demand for electronics to support remote work and schooling amid the pandemic.
Semiconductors enable the key technologies driving the future economy and our national security, including artificial intelligence, 5G/6G, quantum computing, cloud services and more. The New England region is home to a number of semiconductor manufacturers — including industry leaders like Analog Devices and Texas Instruments — as well as a wide array of technology businesses who rely on semiconductors to support continued innovation and growth. And so the impact of this shortage on our region has been significant.
At the same time, according to the Semiconductor Industry Association, the percentage of modern semiconductor manufacturing capacity located in the U.S. has declined significantly from 37 percent in 1990 to just 12 percent today. This is due in large part to the fact that other countries — such as China, India, and Korea — have invested in chip manufacturing incentives, while the U.S. has not. Federal investment in chip research has also remained stagnant in the U.S., while other nations have ramped up research investment.
The CHIPS and Science Act will make significant strides to address the shortage and increase domestic capacity by providing $52 billion in subsidies for U.S. semiconductor production, as well as an investment tax credit for chip plants estimated to be worth $24 billion. The new law also authorizes more than $170 billion over five years to boost U.S. scientific research to better compete with China.
Beyond its vital support for the semiconductor industry, this legislation also makes several other important investments that will support continued growth in the New England innovation economy. The bill authorizes $81 billion in funding over five years for the National Science Foundation to support STEM education, establish regional technology hubs and support a new technology directorate that aims to turn basic research breakthroughs into real-world applications.
New England is, of course, home to some to some of the world’s leading research institutions, and received nearly $800 million in NSF funds in 2021, including over $33 million in New Hamp shire alone. Our region will undoubtedly benefit from this additional infusion of NSF funding.
In addition to this critical funding for the NSF, the bill also provides research funding for the Department of Commerce, the Department of Energy, NASA and National Institutes of Standards and Technology to increase investments in research and development.
The New England Council is grateful to the many members of the region’s Congressional delegation who supported this important legislation, including Senators Jeanne Shaheen and Chris Murphy, and Representatives Annie Kuster and Chris Pappas here in New Hampshire. The investments in this bill with breathe new life into domestic semiconductor manufacturing, make our nation more competitive on the global stage, and spur new research and scientific breakthroughs that will no doubt have a lasting impact for many years to come.