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Making Sense of: How America’s CHIPS Act Fuels Domestic Innovation

chip manufacturing

American companies are outpacing European ones on innovation and technology.

That’s what the head of Norway’s $1.6 trillion oil fund told the Financial Times Wednesday (April 24), and his comments came as just a day later, on Thursday (April 25), French President Emmanuel Macron urged the European Union (EU) to move towards greater economic self-sufficiency — citing the 27-member nation bloc’s lack of preparedness for the “change of paradigm” now facing the world.

And with the announcement on Thursday that the U.S. Department of Commerce had reached a preliminary agreement with Micron, the largest U.S. maker of computer-memory chips, to provide up to $6.14 billion in direct funding under the CHIPS and Science Act, American innovation and future-readiness is top of mind.

That’s because novel technologies, such as artificial intelligence (AI), are at the heart of the paradigm change reshaping the global macro landscape; and with recent multi-billion-dollar grants to Intel, TSMC, Samsung and Micron, the U.S. government is taking crucial steps to ensure that the companies and industries building the critical infrastructure of tomorrow are appropriately supported.

Semiconductors were invented in America and power everything from cell phones to electric vehicles, refrigerators, satellites, defense systems and more. But today, the United States produces only about 10% of the world’s chips and none of the most advanced ones, the White House statement noted.

Including Thursday’s Micron grant, the U.S. government has now spent over half its $39 billion in CHIPS Act incentives, and those investments are poised to help power the connected economy of the near future, as well as transform the fundamental architectures supporting payments and commerce.

Read more: U.S. Gives GlobalFoundries $1.5 Billion to Accelerate Domestic Semiconductor Industry

Winning on Innovation Requires Investing in Infrastructure

Leading-edge memory chips, like the ones that Micron produces, are critical for advanced technology, including AI and advanced computing and communications.

“Semiconductors are the brain of modern technology. While they are no larger than a fingernail and no thicker than a piece of paper, they are essential to every electronic device that we currently use — from computers and televisions to cars and washing machines,” said Vice President Kamala Harris in an earlier statement.

But as developing industries like AI, electric vehicles (EVs) and other digitally powered innovations create a powerful demand for chips, current global capacity has been strained — and supply chain shortages of chips can cause hundreds of billions of dollars of economic damage across a variety of industries, as disruptions during the COVID-19 pandemic showed.

That’s why, in 2024 alone, the U.S. has already announced six major funding outlays to domestic companies building the key components of the connected economy’s most transformative products.

Read moreChiplet Technology May Be Poised to Transform Payment Systems

Ensuring a Stable Supply Chain for Critical Technologies 

This month, Samsung received a $6.4 billion grant to build leading-edge logic, R&D, and advanced packaging fabs in Taylor, Texas, and to expand a current-generation and mature-node facility in Austin, Texas; while Taiwan Semiconductor Manufacturing Company (TSMC) received $6.6 billion to support the development of three greenfield leading-edge fabs in Phoenix, Arizona.

Earlier in March, the U.S. announced a $8.5 billion grant for Intel to support investments across four states, (Chandler, Arizona; Rio Rancho, New Mexico; New Albany, Ohio; and Hillsboro, Oregon) to construct new leading-edge logic fabs, modernize advanced packaging facilities, and invest in R&D.

In February, as reported here, the U.S. announced $1.5 billion for GlobalFoundries to support the development and expansion of facilities in Malta, New Yok, and Burlington, Vermont. In January, the White House granted $162 million for Microchip Technology Inc. to increase its production of microcontroller units and other specialty semiconductors, and to support the modernization and expansion of fabrication facilities in Colorado Springs, Colorado; and Gresham, Oregon.

The grants are meant to boost domestic supply chains for the critical components powering connected devices popular with consumers, including wearables, smart home devices or connected cars.

“From smartphones to AI to our nation’s most sensitive defense technologies, the memory chips Micron makes are in nearly every product of our modern economy,” New York’s Chuck Schumer, the Senate majority leader, said in a statement regarding the Government’s most recent grant to Micron. “But, as the pandemic showed, when we don’t shore up our supply chains and make these chips in America, we can be left vulnerable, prices can skyrocket, and our national security can be threatened.”