US CHIPS Bill to boost semiconductor production

August 2, 2022

On July 28, 2022, the US House of Representatives passed the CHIPS and Science Bill. CHIPS bill stands for “Creating Helpful Incentives to Produce Semiconductors”. The CHIPS bill has been passed to provide assistance and subsidies worth USD 280 billion.

Important features of the bill include;

The bill specifically focuses on semiconductor industry in United States. Semiconductor industry in US is facing competition from China.
It would provide USD 52 billion to companies that are involved in manufacturing chips in US, in subsidies and additional tax credits.
USD 200 billion will be provided for scientific research, in the fields of artificial intelligence and other novel technologies.

This bill was passed considering many factors. One major factor was lobbying by some chip manufacturers. Furthermore, in 2021, there was a global shortage of semiconductors or chips. It pushed US to recognise its need for substantial manufacturing. Apart from that, increased use of devices link laptops since 2020 has further boost the demand of chips. Currently, 75% of world’s reliance on semiconductors is fulfilled by East Asia.

Significance of the Semiconductor:

Semiconductors are important for running most electronic devices that are useful in daily lives. They are made from materials such as silicon. They are used in form of data-storing memory chips, or logic chips to run programs. They are like “brains” of a device. The manufacturing of chips requires a lot of precision, as well as investment. Additionally, they need very particular conditions, where even small disturbances around or inside the manufacturing unit can interfere with production.

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