What to Know About the CHIPS Act

In July, U.S. Congress passed the CHIPS Act. The purpose of the act is to better ensure investment in national semiconductor companies as opposed to international semiconductor companies that have largely dominated this technological landscape in recent decades.

Recently, SupplyChainBrain published an article highlighting the significance of the CHIPS Act and its potential influences on the American supply chain. As 3PL software solutions providers whose products integrate with reverse supply chain workflows, we wanted to take a moment to highlight this article as well as the CHIPS Act itself and its potential impacts on the industry.

What Is the CHIPS Act?

The CHIPS Act is a bipartisan act passed on July 28, 2022. The act incentivizes semiconductor manufacturers to invest in American labor and development and thereby prevent chip-related supply chain issues which can cause mass disruption for all involved parties.

How will the CHIPS Act specifically help domestic businesses? By bolstering semiconductor leaders at home with billions of dollars in incentives. That’s $52.7 billion to be exact. Of that $52 billion:

    • $39 billion will go toward manufacturing incentives
      • Includes $2 billion for defense and automobile industries
    • $13.2 billion will funnel into R&D and workforce development
    • $500 million will be used for the international information communications technology security and supply chain activities

The hope is not only for domestic chip growth but also for the creation of tens of thousands of jobs for American workers.

Why Does It Matter?

As the United States grows less reliant on foreign chipmakers, so increases our capabilities to implement technological advances as we see fit. This is especially important for national security and domestic dependence on technology. In other words, the U.S. will become less reliant on foreign gatekeepers of top-quality chips for vital elements of daily life in the 21st century. This is especially vital when you consider security implications. 

Furthermore, The White House had the following statement when briefing on the act, “the CHIPS and Science Act will boost American semiconductor research, development, and production, ensuring U.S. Leadership in the technology that forms the foundation of everything from automobiles to household appliances and defense systems.”

So while there are practical reasons–like the aforementioned foreign reliance–for this act, it seems there are also hopes that United States innovations will grow and maintain the level of success as seen with Intel Corporation or international companies like Taiwan Semiconductor Manufacturing Co. 

How the CHIPS Act Could Affect Supply Chain Issues

According to SupplyChainBrain, if all goes according to plan, there is less of a chance that the American supply chain sees another chip shortage like the one we’ve seen in recent years. That said, demand and production must fall in line with one another, and additional pertinent supply chain issues will also need to be addressed (i.e., shipping).

Practically speaking, perhaps a more domestic approach to chipmaking will also lead to less waiting. Supply chain woes aside, less reliance on international chips also means a potential product efficiency boost from the raw material stage down to a finalized transaction. In other words, this could mean one less step in the development of commercial technology in the states.

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