Sujai Shivakumar, Charles Wessner, and Thomas Howell
In 2022, Congress enacted the bipartisan CHIPS and Science Act (CHIPS Act), a pivotal initiative which seeks to ensure U.S. leadership in semiconductor technology—the backbone of everything from cars to household appliances to defense systems. The CHIPS Act represents a national effort to reverse recent trends, driven by major industrial policies of other countries, that have led to the loss of U.S. leadership in the technology needed to manufacture the most advanced semiconductors. The United States has also seen an erosion of onshore chipmaking, which now accounts for only about 10 percent of global capacity. The urgency of the situation was brought into sharp relief by highly disruptive chip shortages during the Covid-19 pandemic. Meanwhile, China—the United States’ most formidable strategic competitor—is making rapid strides in semiconductor technology, particularly in defense-related areas.
In its plan for implementing the CHIPS Act, the U.S. government has earmarked substantial federal assistance for the world’s three most advanced chipmakers, among others, to construct leading-edge manufacturing facilities and grow U.S. regional semiconductor ecosystems. Two of these firms, the Taiwan Semiconductor Manufacturing Corporation (TSMC) and Samsung, are slated to receive substantial funding to support major investments in such ecosystems, which bring manifold opportunities for local growth and employment. Both firms are headquartered outside the United States and have, in the past, kept the lion’s share of their research and development (R&D) and technology development in their respective home countries.
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