Back in our March 2023 issue we put together an article that discussed the CHIPs and Science Act of 2022. Specifically, Congress had previously passed, and President Biden signed into law the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act. This legislation authorized a series of programs to promote the research, development, and fabrication of semiconductors within the United States. The purpose of the CHIPS and Science Act was touted as intended to strengthen American manufacturing, supply chains, and national security, and invest in research and development, science and technology, and the workforce of the future to keep the United States the leader in the industries of tomorrow, including nanotechnology, clean energy, quantum computing, and artificial intelligence. The CHIPS and Science Act is intended to make smart investments, with about $280 Billion available, so that Americans can compete in and win the future.

States Look For A Piece of the Action

Certainly several states have seen this as an opportunity to “get on board” and pull business into their boundaries, with the hope of having federal funds get drafted in as well. Notably, on April 13th, the governor of Oregon, Gov. Tina Kotek, signed Senate Bill 4 – the Oregon CHIPS Act – into law, passing both the Oregon House and Oregon Senate with bipartisan support. This bill dedicates $190 million to grants and loans which will support semiconductor businesses looking to expand to Oregon. Oregon is banking on the opportunity for these businesses to pull through significant federal funding. The Oregon CHIPS Act also funds $10 million for land site preparation funds. These funds are earmarked for communities to use in preparing land for manufacturing sites. An additional $10 million was designated for a University Innovation Research fund.

Not to be outdone, Texas has also picked up on revenue pull through potential by passing The Texas CHIPS Act, which allocates $698 million in incentives for funding chip design, manufacturing, and research companies in the state. Gov. Greg Abbott signed the bill on Jun 8, 2023 to help boost the semiconductor industry in Texas. Texas, Arizona, and New York are expected to see big benefits from the federal CHIPS and Science Act, with Austin, Texas anticipating significant growth and impact.

The Texas CHIPS legislation mandates the creation of the Texas Semiconductor Innovation Consortium and Texas Semiconductor Innovation Fund, which will manage and administer the disbursement of funds. Academic institutions will play a big role in establishing a public-private partnership to boost the chip industry in Texas (regional innovation consortia, which can grab some specific NSF funding, are expected to have significant involvement led by academia institutions). Texas A&M recently approved the creation of Texas A&M Semiconductor Institutes. The University of Texas at Austin last year proposed the creation of Texas Institute for Electronics (TXIE) around the time passage of the US CHIPS Act gained steam. TXIE was proposed as the public-private partnership between the universities, Texas state and US labs to promote chip production and research in Texas. TXIE does not seem operational yet, and the website ( states “coming soon.”

In Arizona, Taiwan Semiconductor Manufacturing Corporation better known as TSMC, is building a new factory—or fab, in semiconductor parlance—in addition to another one announced in 2020. The Taiwanese company is more than tripling its original investment to $40 billion and says the two facilities will create 4,500 direct jobs. The biggest dilemma here is where are the people and skills going to come from? In its same research, J.P. Morgan Research says that global automotive industry will grow 3% in 2023 – meaning that semiconductor demand could get pushed up quicker with the growing footprint of electric vehicles and autonomous vehicles (both having more software content so higher semiconductor computing need).

Spending Not Tracking

The CHIPS and Science Act calls for $280 Billion to be invested in semiconductor related ecosystem initiatives over the next 10 years. The law committed the nation not just to compete with China over industrial policy and talent, but to advance broad national goals such as manufacturing productivity and economic inclusion while ramping up federal investment in science and technology that will enable advanced semiconductor manufacturing. There are many key technology areas that are being driven for advancement in this ambitious law, including advanced manufacturing, AI and machine learning, industrial efficiency, and advanced materials science to name a few. Some of the specific funding intentions included manufacturing and industrial productivity, as well as workforce development and skill gaps. However, the pace of investment doesn’t seem to be tracking at the appropriate run rate levels to move the needle as quickly as an uptick in demand would dictate.

In an article from the Federation of American Scientists, originally published on May 17 in Brookings this year, authors Matt Hourihan, Melissa Roberts Chapman, and Mark Muro wrote, “… it’s become clear that this breakthrough is running into headwinds. In spite of ongoing rhetorical support for the act’s goals from many political leaders, neither the FY 2023 Consolidated Appropriations Act nor the Biden administration’s FY 2024 budget request have delivered on the intended funding targets.”

Perhaps this is due to the catch up in available capacity now the COVID supply-demand mismatch has been worked through the pipeline. According to J.P. Morgan Research, the semiconductor supply began improving in 2022 and is forecasted to continue through 2023.

Matt Hourihan from the Federation of American Scientists, who participated in writing the CHIPS update article, provided some great specific insight to IMD, as he sees a lot being left on the table and the initiative falling short of the bold vision originally communicated. “Congress did provide some nice increases in the FY 2023 omnibus for certain R&D and manufacturing programs, but even those boosts left a nearly $3 billion gap between CHIPS and Science aspirations and reality at the big research agencies. The harder challenge is going to be moving forward. The debt deal will significantly limit discretionary spending over the next two years, and that’s going to make it very tough to ratchet up funding. We’re already seeing the effects in appropriations: just this week House appropriators voted to hold Office of Science funding flat, while cutting several energy innovation, efficiency and manufacturing programs.”

If You Qualify, Leap Now

There is still significant funding available through Technology Innovation Partnerships and other programs at National Science Foundation and Department of Commerce. $53 billion alone has been set aside by the act to bring semiconductor factories back to U.S. shores, with a quarter of that sum earmarked for investment in research and job creation.

On yet another front, Congress has recognized the significance of the funding allocations, with two key senators sending a letter to the Depart of Commerce in late May, imploring that the allocation of semiconductor funding align with the economic and security interests of the United States. Senate Intelligence Committee Chair Mark Warner and Senator John Cornyn said in the letter that the success of the program “depends on a strategic approach that aligns with our national priorities. We implore you to take time to go through every application and determine which ones are most worthy based on national security concerns.” The Commerce Department in late May said that they had received over 300 statements of interest covering 37 states seeking incentives and fund allocation related to the Act.

This bodes well for those manufacturing companies that are in the Aerospace and Defense sector and produce items or work with items having a large semiconductor content.