By Tom Still
MADISON, Wis. – In an age of deep partisan divides, it was perhaps surprising that Congress passed the “CHIPS and Science Act” by wide margins – roughly two-to-one in the Senate and by more than 50 votes in the House of Representatives.
It is less surprising, however, given the even deeper bipartisan concern over economic and strategic competition from China.
The bill President Biden is expected to sign into law authorizes investing up to $280 billion over five years – assuming Congress follows up with annual appropriations bills, which is the normal two-part process. Even if there are changes around the edges, the core direction is set: The federal government will invest a ton of money into reviving 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 sets up new operations in the United States, so long as they refrain from advanced tech investments in “countries of concern” such as China for at least a decade.
It is a move aimed at countering the long slide in American development and production of computer chips. The U.S. share of such chips, used in everything from cars to fighter planes to artificial intelligence, was 37% in 1990. It is about 12% today and could fall, given China’s ongoing investment, and barring a dramatic reversal.
Bringing computer chip production back onshore is big part of what the CHIPS and Science Act aims to accomplish. What has gotten less attention so far is the massive reinvestment in other science and technology research and development. The combination makes the full bill the most significant investment in U.S. industrial policy in decades.
The roots of the bill lie 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. That bill went though several name changes and versions along the way, maintaining the support of all original sponsors except for 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.”
That may be true from a national security perspective, and no one should want the CHIPS and Science Act to turn into a boondoggle. 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 to double spending on the National Science Foundation over time, to support regional technology “hubs” through a competitive process involving researchers and industry, to increase spending on the National Institute of Standards and Technology and its manufacturing-based programs, and to increase R&D through the Department of Energy.
Like the original Endless Frontier Act, the spending in this portion of the bill would focus on advanced energy and industrial efficiency technologies; artificial intelligence and machine learning; advanced manufacturing; cybersecurity; biotechnology; high-performance computing; advanced materials; and quantum information science.
Regional technology “hub” proposals are already being written in Wisconsin, with topic areas that touch on food, water, energy resiliency, manufacturing and generally making better use of resources. In short, the topic areas envisioned by the CHIPS and Science Act are a pretty good match with Wisconsin’s traditional economic sectors.
The hub proposals are being submitted through NSF, which has made it clear that proposals that fail to involve industry or to broadly address job creation may not make the cut.
The process set into motion by the CHIPS and Science Act will take years to unfold, although the competition for semiconductor production will begin sooner than later. Major chip makers such as Intel, GlobalFoundries, Taiwan Semiconductor Manufacturing and Samsung have signaled they may apply. If so, Wisconsin could again find itself on a short list for landing a chipmaking facility.
Over time, it will also be worth watching to see how the rest of the bill compels Wisconsin researchers, industry and others to work together.
Still is president of the Wisconsin Technology Council. He can be reached at email@example.com.