CHIPS Act – a Vision for America’s Technological Leadership

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US Secretary of Commerce Gina Raimondo today delivered a speech titled “The CHIPS Act and a Long-term Vision for America’s Technological Leadership” at Georgetown University’s School of Foreign Service. In her remarks, Raimondo outlined the  opportunity provided by the CHIPS and Science Act and the long-term goals she has set for the program to solidify America’s technology and innovation leadership while protecting America’s economic and national security. 

The CHIPS Act allocated $39 billion for manufacturing incentives to encourage companies to build and expand. Commerce will be announcing the first application next week.

“Today I’d like to talk about the incredible opportunity we have as a nation to unleash the next generation of American innovation, protect our national security, and preserve our global economic competitiveness as we implement the historic CHIPS and Science Act. From the lightbulb to lasers, and from semiconductors to supercomputers, America has always been a nation of invention, entrepreneurship, and innovation. Throughout our history, there have been moments—like the one we are in today—of tremendous global competition where we, as a nation, have come together to drive technological progress on an unprecedented scale and ensure America’s global leadership.

Excerpts and key points from Gina Raimondo’s speech

• In the 1860s, President Lincoln made historic investments in agriculture and created the land-grant university system to ensure America’s food security.
• In the 1940s, President’s Roosevelt and Truman invested in our nuclear security and pushed the boundaries of scientific innovation in the process.
• In 1961, President Kennedy united the country around his call to put a man on the moon by the end of the decade. And in so doing, he created a generation of engineers, scientists, test pilots, and manufacturing workers who propelled America’s economy and national security far ahead of the Soviet Union.

 “Today, because of President Biden’s leadership, working with Congress, the CHIPS and Science Act presents us with an opportunity to make investments that are similarly consequential for our nation’s future. But only if we–as a nation—unite behind a shared objective, generate a similar public-private mobilization and think boldly.

 “The research, innovation, and manufacturing sparked by this law can enable us to be the technological superpower, securing our economic and national security future for the coming decades. As with our leadership in nuclear energy and the space race, America’s ability to maintain our competitive edge in advanced technologies is essential to our ability to ensure the responsible deployment of that technology. Semiconductors form the foundation of all advanced technology…many of which can be used for good or for malign purposes.

“The stakes couldn’t be higher.

“Next week, we will launch our first application for CHIPS funding, focused on commercial manufacturing facilities.

This money will incentivize companies to manufacture semiconductors here on American soil. In the coming months, we will put out additional funding opportunities for supply chain companies and R&D investments. Years from now, when we judge the success of this program, we will be measured on at least two key imperatives”

“First, whether this program enabled us to build a reliable and resilient semiconductor industry that protects America’s technological leadership for the coming decades. As global competition becomes increasingly about technology and chips, rather than just tanks and missiles, it’s the countries who invest in research, innovation, and their workforces that will lead in the 21st century.

 “Second, we will be judged on whether we were good stewards of taxpayer dollars. We are making a public investment in private industry without recent precedent, and taxpayers deserve transparency and accountability.

“But before we look forward, let’s take a look back.

• America invented the semiconductor industry. And in the 60s, the industry was in a golden age.
• New companies were sprouting up left and right in what came to be known as Silicon Valley.
• Universities established new departments in computer science, electrical engineering, and materials science to train the talent the industry needed.
• Interestingly, manufacturing—not software or algorithms—powered this engine of innovation.
• And although the chip companies were fiercely competitive, there was an industry-wide effort to advance the technology. The government drove these advances through purchases and tech transfers.
• Tens of thousands of engineers in these companies would make daily incremental innovations in manufacturing techniques, resulting in improved scaling and yield, through expertise that is only possible by producing millions and millions of wafers.

“This relentless pace of lab-to-fab and fab-to-lab innovation became synonymous with America’s tech leadership, doubling our computing capacity every two years. This ecosystem enabled every smartphone, cloud computing service, new car, medical device, and weapons system we use today.

“But what was once a self-propelling engine of innovation and production fell out of balance. We sacrificed our manufacturing capacity and workforce in the mistaken belief that we could somehow maintain our technological leadership without them.

• In 1990, the U.S. accounted for 37% of global chip manufacturing capacity. Today, that number is only 12%.
• We once manufactured nearly all of the world’s most advanced semiconductors. Today, we manufacture none.
• Taiwan alone produces 92% of the world’s leading-edge chips, even though the majority of them are still based on technology created at UC Berkeley—with federal funding.
• In 2001, the U.S. had more than 300,000 semiconductor manufacturing workers.
• In the past 20 years, we lost a third of those jobs while the global semiconductor industry has more than tripled in size.
• As the cost of innovation increased, the semiconductor supply chain became more globalized in search of both specialization and cost-savings in different parts of the world.
• As a result, today there are fewer suppliers to the industry and fewer opportunities for a new generation of innovators to develop cutting-edge R&D.

“Of course, as President Biden often points out, these losses aren’t limited to the semiconductor industry. In fact, over the last 25 years, America lost a quarter of its small and midsize manufacturers, and with them, we lost their know how, skills, and jobs they once had.

“This manufacturing atrophy has real consequences. For starters, it’s a threat to our national security. So many of our defense capabilities – like hypersonic weapons, drones, and satellites – depend on a supply of chips that aren’t currently produced in America.

“But, our dependence on foreign semiconductor supply chains also hurts our economy. In 2021, car prices increased nearly 30% and were responsible for a third of core inflation—all because we didn’t have enough chips. Last year, because Ford didn’t have access to enough chips—even for simple things like windshield wipers—their workers in places like Michigan and Indiana only worked a full week three times. In the entire year! The chip shortage meant medical device makers didn’t have enough chips to produce life-saving products like pacemakers and insulin pumps, which are used every day in every hospital in America.

Meanwhile, over the last two years, China has produced more than 80% of new global capacity for certain mature chips, and their market share is growing.

“The process of designing and building chips has become the most technical and sophisticated manufacturing process in human history. And the brutal truth is that, without manufacturing strength in the U.S., and the innovation that flows from it, we are at a clear disadvantage in the race to invent and commercialize future generations of technology.”

Gina Raimondo on the passage of the Chips Act – click here