The quest to put a chip on America’s shoulder

The Senate is poised to hold a procedural vote as early as today on the US CHIPS Act, which would allocate $52 billion in subsidies (plus additional tax credits) to attract advanced semiconductor manufacturers to the US.

🏛🗳 Driving the move: While exact details are scarce, the measure is aimed at making America more competitive with China, whose chip industry has grown over the last five years to account for nearly 10% of global sales (up from 4%).

• The bill itself is bipartisan, but Republican critics have said they plan to oppose the CHIPS Act unless Democrats stop trying to pass an unrelated climate and prescription-drug bill along party lines (which suffered a setback last week).

💻🏭 A deeper dive… Some companies within the chip industry itself are also opposed to the bill, voicing concerns that it disproportionately benefits manufacturers like Intel while leaving out companies that focus solely on chip design, like AMD, Qualcomm, or Nvidia.

Other firms are holding multi-billion dollar projects over lawmakers’ heads in an effort to get the CHIPS Act passed.

• Intel indefinitely delayed the groundbreaking ceremony for a planned $20 billion chip-making factory in Ohio last month “due in part to uncertainty around” the legislation.
• Weeks later, Taiwanese chip supplier GlobalWafers announced plans to build a new $5 billion factory in Sherman, TX – but only if the CHIPS Act is ultimately approved.

🌏 The big picture: Taiwan dominates the global foundry market – aka the companies that actually manufacture chips (which are designed by other companies) – with a 66% market share. It houses the world’s largest foundry, TSMC, which counts major firms like Apple, Qualcomm, and Nvidia as its clients.

+Flash poll: Do you think Congress should pass the $52 billion CHIPS Act?

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No

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