The Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, signed into law by President Biden in August 2022, is a landmark piece of legislation to revitalise the American semiconductor industry. This Act represents a multi-faceted approach to bolstering domestic semiconductor manufacturing, research, and development. The ultimate aim is to secure the US’s position as a global leader in this critical technology. Let’s explore the US CHIPS Act.
Why the CHIPS Act?
The CHIPS Act was born out of a growing concern over the US’s increasing reliance on overseas semiconductor production, particularly in Asia. This dependence has exposed vulnerabilities in the supply chain. In turn, these vulnerabilities potentially jeopardise the country’s national security and economic competitiveness. The COVID-19 pandemic further exacerbated these concerns, highlighting the fragility of global supply chains and the need for a more resilient domestic semiconductor industry.
Key provisions and funding
The CHIPS Act allocates approximately $280 billion to achieve its ambitious goals.
A significant portion, $52.7 billion, is dedicated to incentivising companies to build and expand semiconductor fabrication plants within the U.S. This includes:
- $39 billion in grants, loan guarantees, and tax credits for constructing new facilities and expanding existing ones.
- $11 billion for advanced semiconductor research and development, fuelling innovation and ensuring the US remains at the forefront of technological advancement.
This funding supports initiatives like the National Institute of Standards and Technology (NIST), Manufacturing USA, and the establishment of a National Semiconductor Technology Center (NSTC).
Companies investing in semiconductor manufacturing equipment and facilities are eligible for a 25% tax credit, further encouraging domestic investment.
Strategic objectives
The CHIPS Act is designed to achieve several key objectives:
- Boost domestic production: The Act seeks to significantly increase domestic semiconductor production, aiming to raise the US share of global production from its current 12% to a much higher level.
- Stimulate job creation: The construction and operation of new fabrication plants and related industries are expected to generate thousands of high-paying jobs across the country, boosting the economy and providing opportunities for American workers.
- Drive technological advancement: Increased funding for research and development will accelerate innovation, ensuring the US maintains its technological edge in the semiconductor industry.
- Enhance national security: By reducing reliance on foreign semiconductor production, the Act aims to strengthen national security and mitigate risks associated with supply chain disruptions.
Navigating the complexities: How ITLawCo can help
The CHIPS Act presents both opportunities and challenges for businesses in the semiconductor industry. Navigating the complexities of this legislation, including funding applications, compliance requirements, and intellectual property considerations, requires specialised legal expertise.
This is where ITLawCo comes in. We are a team of experienced technology lawyers with a deep understanding of the CHIPS Act and its implications. We can assist businesses in:
- Understanding the CHIPS Act: We provide comprehensive guidance on the Act’s provisions, eligibility criteria, and funding opportunities.
- Ensuring compliance: We help businesses navigate the complex compliance requirements of the Act, including restrictions on overseas investment and reporting obligations.
- Protecting intellectual property: We advise on intellectual property strategies related to semiconductor technologies, ensuring your innovations are protected.
- Negotiating agreements: We assist in negotiating agreements with government agencies, industry partners, and other stakeholders.
With ITLawCo’s support, businesses can confidently navigate the US CHIPS Act landscape and capitalise on the opportunities it presents. Contact us today to learn how we can help you achieve your goals in this evolving industry.