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Biden signs $280 billion CHIPS and Science Act

Biden signs $280 billion CHIPS and Science Act

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The bill includes $52 billion in semiconductor subsidies

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The image is an illustration of a semiconductor chip.
Illustration by Alex Castro / The Verge

President Joe Biden signed the CHIPS and Science Act on Tuesday, writing into law the $280 billion package that includes $52 billion in funding to boost US domestic semiconductor manufacturing. 

“Today is a day for builders. Today, America’s delivering,” Biden said during the White House signing ceremony on Tuesday. “The CHIPS and Science Act is a once in a generation investment in America itself.”

The bipartisan deal to revive American innovation in opposition to growing Chinese technological dominance comes amid an ongoing global semiconductor shortage. The shortage has become an incentive for manufacturers like Intel to invest in new plants to meet the growing demand for tech products like laptops and smartphones worldwide. But US officials fear that, without government intervention, chip manufacturers will continue to offshore new foundries to China, leaving little room for the US to profit off of an industry it pioneered decades ago. 

“The CHIPS and Science Act is a once in a generation investment in America itself”

Those fears were nearly actualized after Intel approached the US Department of Commerce with a proposal to take over an abandoned factory in China sometime this year, according to a recent report from The New York Times. The Times confirmed that Intel suspended the plan, but company conversations with the administration pressured lawmakers to act on the chips investment bill ahead of their August recess.

Late last month, the House and Senate approved the CHIPS and Science Act after nearly two years of negotiations and political infighting. Among its investments in American scientific research, it includes $52 billion in subsidies to encourage chip manufacturers to build out semiconductor fabrication plants, or “fabs,” in the US.

In July, Commerce Department Secretary Gina Raimondo warned that the US could miss out on the semiconductor industry’s rush to produce more chips. “Semiconductor companies need to get ‘concrete in the ground’ by this fall to meet this increased demand in the years ahead,” Raimondo said in a letter with Secretary of Defense Lloyd Austin, according to CNN. “CEOs of firms all along the supply chain have made clear that the industry is deciding where to invest now.”

Tuesday’s funding authorization brings Intel and other chipmakers one step closer to building out plants in states like Ohio and Arizona, projects that are reliant on the subsidies.