Can New Federal Incentives Jump Start Domestic Chipmaking Factories?

AUSTIN, Texas - Aug. 15, 2022 - PRLog -- The Russian invasion of Ukraine has caused worldwide economic disruption and led to rising energy prices for oil and natural gas.

But what would be the consequences of China invading Taiwan?

We got a strong reminder of the possibility that could happen last week when China conducted military exercises around the island during the visit of US House Speaker Nancy Pelosi.

Taiwan is vulnerable. And it's the home of TSMC, one of the world's most advanced chipmaking companies, as well as an entire ecosystem of suppliers providing key components and advanced technology for the microelectronics manufacturing industry.

Since the start of the pandemic, chip shortages have roiled the manufacturing industry, leading to a production rollback in the auto industry alone of millions of vehicles worldwide.

A Chinese invasion of Taiwan could paralyze industries around the world (including potentially those in China) that are increasingly dependent on advanced computer chips.

The Bi-Partisan United States Chips And Science Act (CHIPS-Plus) Becomes Law

This week, President Biden signed into law the United States Chips and Science Act (also known as CHIPS-Plus), a rare bi-partisan bill that promises to invest $200 billion in the next five years to help reshore chip manufacturing operations back to the USA.

The need is great, for as we have learned all too well during the pandemic just how vulnerable our economy is to overseas producers for mission-critical parts and materials.

The bill includes increased funding and incentives for research and development, industrial chipmaking production, STEM education, and space exploration:

- $170 billion in research funding is split between the National Science Foundation and the Department of Energy to promote new technology development (including AI, quantum computing, advanced material science, and manufacturing)
- $13 billion to fund STEM education, especially in rural areas
- $39 billion in incentives for companies to build, update, or grow their US chipmaking facilities
- A new 25% tax credit for investing in new semiconductor manufacturing equipment or new manufacturing facility construction
- Funding for NASA's moon and Mars exploration programs

Creating An Ecosystem For Leading Edge Chips Manufacturing Is A Tall Order

Given the current geopolitical situation (as well as our increasing dependence on computer chips!) it's easy to justify the need to make investments to help America to become more "chip" independent.

Unfortunately (re-)creating prowess in chipmaking technology is not easy, nor can it be accomplished quickly – so we need to set our expectations accordingly.

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