House Passes Bill to Increase Semiconductor Production in the U.S.

Semiconductors, also known as microchips, are one of the most important parts of many manufacturing operations. They are used in cars, cell phones, medical equipment, and much more. When this industry began experiencing delays and shortages, it created a domino effect in adjacent industries. Analysts predicted that these shortages would continue until 2023 unless a solution was found.  

Semiconductor microchip graphic

CHIPS for America Act

On February 4, 2022, the U.S. House of Representatives passed an updated version of the CHIPS for America Act. In an attempt to encourage businesses to manufacture more semiconductors within the United States. This bill includes $52 billion in grants and subsidies for the semiconductor industry and $45 billion toward improving the supply chain.

The bill has been delayed as Congress debates on whether the bill should include measures that are unrelated to the semiconductor industry. These measures include $8 billion to aid developing countries to adjust to climate change; $3 billion for facility production to make the U.S. less reliant on Chinese solar components; $4 billion for communities with significantly higher unemployment than the national average; and $10.5 billion for states to stockpile drugs and medical equipment.

Semiconductor Industry Investments

Since the beginning of 2021, the semiconductor industry has announced many new investments. One of the most recent of these announcements came from Intel, a leading manufacturer of computer chips and processors. The company announced a $20 billion investment in a new semiconductor manufacturing plant in Ohio. This is the largest single private-sector investment in the state’s history and is reliant on the subsidies from the passage of the CHIPS for America Act.

In a statement from the White House, nearly $80 billion in new investments to the semiconductor industry have been announced. These investments will be implemented between now and 2025.

Economic Impact

In 1990, the U.S. was producing 37% of semiconductors globally. Today, that number has reduced to about 12%. Despite the large decline, semiconductors remain to be the 4th largest industry export in the U.S. With large companies like Intel and Samsung considering new semiconductor investments, the U.S. is positioned to grow into the largest export nation within the next few years. Analysts estimate that every $1 invested in semiconductor research will yield $16.50 in GDP growth over the next 5 years. It is also predicted that if the CHIPS for America Act passes, it could create up to 500,000 jobs by 2029.

Now that the latest version of the bill has been passed by the U.S. House of Representatives, we await the Senate’s vote to see if this will be brought into law. With support and encouragement from the Biden administration to pass the bill, this could potentially be a huge boost to the economy.