The Chips Act – Reinvigorating the Semiconductor Industry 💻

The Chips Act – Reinvigorating the Semiconductor Industry

In a bid to spur the semiconductor industry, the United States Commerce Department is set to kick off a $53 billion subsidy package dubbed “The Chips Act”. Throughout the mid-20th century, semiconductors were a bright and viable manufacturing industry that was set to define industrial America. Then, decades ago, American semiconductor companies began offshoring their labor-intensive jobs overseas, sacrificing domestic economic activity and innovation. Now, being conceived eight months prior, the Chips Act will serve to bolster the insourced manufacturing of semiconductors through a package of incentives and subsidies. Following the pandemic-induced shortages of chips generated by foreign supply chains, the United States saw the reliance several complementary industries had on semiconductors.

The move to invest heavily in the $600 billion global industry also comes as a competitive jab to China, the world’s leader in semiconductor manufacturing. The U.S. believes that the amount of capital invested into domestic chip manufacturers can both increase our global presence in the industry and become technologically competitive with China on the innovative front. Furthermore, semiconductors have substantial national security implications, as they are used in a variety of military applications, such as communications and cybersecurity. With hopes to ramp up production domestically, the U.S. believes it has a valid shot at creating a positive trajectory for the domestic chip industry, serving a multitude of long-term benefits to the national interest.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

 

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