By James T Brett
In late July, after nearly two years and several iterations, Congress passed sweeping bipartisan legislation aimed at boosting domestic semiconductor manufacturing and making important investments in research and development. The New England Council was proud to support the CHIPS and Science Act, and its passage is a major win for New England’s innovation economy.
This new law allows for more than $50 billion in investments to strengthen the US semiconductor manufacturing industry. In recent years, our country has experienced a critical shortage of semiconductor chips. The shortage is the result of a perfect storm of circumstances, including a multitude of supply chain restrictions, combined with increased demand for electronics to support remote work and schooling amid the pandemic. Semiconductors enable the key technologies driving future economies and our national security, including artificial intelligence, quantum computing, cloud services, and more. New England is home to a number of semiconductor manufacturers as well as a wide range of technology companies.
According to the Semiconductor Industry Association, the percentage of modern semiconductor manufacturing capacity in the US has declined significantly from 37% in 1990 to just 12% today. This is in large part because other countries — like China, India, and Korea — have invested in chipmaking incentives while the US hasn’t. Government investment in chip research has stagnated while other nations have ramped up.
The CHIPS and Science Act will make significant strides to address the shortage and increase domestic capacity by providing $52 billion in subsidies for U.S. semiconductor production and an estimated $24 billion investment tax credit for chip fabs to be provided. The new law authorizes more than $170 billion over five years to boost scientific research in the US to better compete with China.
This legislation will make several other important investments to support the growth of New England’s innovation economy. The bill authorizes $81 billion in funding over five years to the National Science Foundation to support STEM education, establish regional technology centers and support a new technology directorate aimed at delivering breakthroughs in basic research into real applications. Home to some of the world’s leading research institutions, New England received nearly $800 million in NSF funding in 2021, including $560 million in Massachusetts alone. Our region will undoubtedly benefit from this additional infusion of NSF funds.
The bill provides research funding for the Department of Commerce, Department of Energy, NASA and the National Institutes of Standards and Technology to increase investment in research and development.
Investing in this law will breathe new life into domestic semiconductor manufacturing, make our nation more competitive on the global stage, and drive new research and scientific breakthroughs that will no doubt have a lasting impact for years to come.
James T. Brett is President and CEO of The New England Council, a regional alliance of business, non-profit, health and education organizations dedicated to economic growth.