US CHIPS Act: What Is It, and Will It Make Devices Cheaper?


Close up of a chip
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Following months of debate, the CHIPS and Science Act was passed by the United States Congress on Thursday. But what is it, and what impact will it have on our electronics?

What Is the CHIPS Act?

The CHIPS and Science Act of 2022, usually shortened to just the CHIPS Act or H. R. 4346, is a bill that received bipartisan support in the House of Representatives and Senate. It passed in the Senate on Thursday, with 243 votes in favor and 187 votes against, and is awaiting the signature of President Joe Biden before it becomes law — it may have already been signed by the time you read this.

The main centerpiece of the CHIPS Act, and where the acronym comes from, is the “Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Fund.” The bill sets aside more than $52 billion in subsidies to “support the development and adoption of secure and trusted telecommunications technologies, secure semiconductors, secure semiconductors supply chains, and other emerging technologies.” That money is intended to fund the construction of semiconductor fabrication plants, or ‘fabs’ for short, in the United States.

The bill also aims to boost education and science work in the United States, including establishing multiple “Carbon Materials Research Center” locations, coordinating climate research between NOAA, NASA, and other agencies, improving STEM education programs, upgrading the Energy Sciences Network, and more. The entire CHIPS Act is over 1,000 pages long.

President Biden has repeatedly endorsed the bill, saying “it unlocks significant investments in American science and technology that will power our economy and national security for decades to come.” Unsurprisingly, chip manufacturers are also excited. Intel CEO Pat Gelsinger called it “a critical step to support the entire U.S. semiconductor industry.”

Why Does the CHIPS Act Exist?

Over the past few years, modern semiconductor chips — which are required for all modern electronics, from smartphones to trucks — have been in short supply. Limited production capacity, growing demand for electronics, political disputes, and supply chain problems from the COVID-19 pandemic are all contributing factors. The shortage has led to graphics cards becoming hard to find (which is finally starting to change), car makers leaving out some features in new cars, rising costs for some computer components, and other problems.

There are many fabrication plants worldwide, but most of them can only manufacture larger node sizes, while smaller node sizes are more desirable for new products. For example, Intel processors from a few years ago (like the Core i5-8250U) were built on a 14 nm process, but the Snapdragon 8 Gen 1 chipset used in the Galaxy S22 is built on a 4 nm process. Smaller processes allow chips to run at higher speeds and improve power efficiency — crucial factors for modern electronics, especially portable devices. Apple’s M2 chipset, found in the new MacBook Air, uses 5 nm technology from Taiwan Semiconductor Manufacturing Company (TSMC). That’s also the same company that produces most of AMD’s processors, chips for Nvidia and AMD graphics cards, some Intel chips, and many other products.

Only a few factories in the entire world can produce chips with smaller processes, so when one of them has problems (like Taiwan dealing with water shortages), it has ripple effects throughout the entire supply chain. That’s why it’s important to build more factories in more locations around the world.

There are other political factors involved with chip production. Taiwan, where TSMC and most of the company’s factories are based, is at the center of escalating political tensions between China and the United States. Many other crucial factories are in mainland China, which is still in a trade war with the United States. Geopolitical relations are far beyond the purview of How-To Geek, but simply put, many government officials in the United States would prefer to be less reliant on importing chips from other countries — which is why the CHIPS Act gives companies money to build factories in the US.

Does the CHIPS Act Matter to Me?

There are many reasons for businesses and governments to care about the CHIPS Act, but what about us? What will it change in our day-to-day lives? Well, that’s harder to answer right now.

We know for certain that the CHIPS Act won’t change anything in the near future. It takes years to plan and build new chip fabrication plants. However, if the new fabs provide more manufacturing capacity as planned, it could bring down the price of semiconductor chips and lead to cheaper electronics. The diversified production might also reduce future chip shortages.

Render image of future Ohio factory
Intel’s planned chip fab in Ohio Intel

The promised result depends on more devices switching to chips built in the United States, primarily from Intel, which is currently building two chip fabs in Ohio. Intel can’t yet match TSMC and Samsung’s more advanced chip production lines, and the company has gone through multiple delays with new chips.

In short, we’ll have to wait and see.

Note: The author of this article owns stock in AMD, a chip manufacturer.





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