The bill, which passed by a margin of 64 to 33 in the Senate on July 27 and a margin of 243 to 187 in the House on July 28, 2022, represents a compromise between U.S. innovation law and competition of 2021 passed by the Senate (USICA) (S.1260) and the House-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act Of 2022 (COMPETES) (HR 4521), both of which focus on the increased US R&D and manufacturing competitiveness with China, but used different legislative approaches. After negotiations broke down in the conference’s bicameral committee – formed to iron out differences between competing bills – many assumed that no legislative agreement would ultimately be reached.

The CHIPS Plus package, consisting of a simplified version of the COMPETES Act and USICA, has reinvigorated legislative efforts. The final package includes billions of dollars over five years to the Departments of Commerce, State and Defense to support domestic semiconductor research and development and chip manufacturing, as well as various provisions that provide investment research in semiconductor technology through the National Science Foundation (NSF), National Institute of Standards and Technology (NIST), and the Department of Energy (DOE).

Provisions that would have impacted existing trade and pricing policies are notably absent from the enacted version of the bill. These and other elements of the COMPETES Act and USICA that were not included in CHIPS Plus may be revisited and negotiated before the conclusion of the 117e Congress at the end of this year.

Overview of the main CHIPS Plus provisions

Investment in semiconductors

The main provision of the bill – known as the Chips Act of 2022 – is $52.7 billion in federal investments over five years for the expansion of domestic semiconductor production. The measure earmarks new federal dollars primarily to the Department of Commerce to fund and promote chip manufacturing, testing, research and development activities that will make America more competitive with China. The money can be used to develop domestic manufacturing capabilities, conduct research and development, and strengthen the domestic semiconductor workforce. Funding under these programs will be provided by the Department of Commerce through direct grant and loan programs.

Among the new financings, the most important incentive program for American companies is the “CHIPS for American Program”, which devotes $39 billion over the next five years to incentives for national facilities and equipment of semi- drivers, with $2 billion specifically allocated to legacy chip production. The legislation does not provide a specific timeline as to when the allocated funds will be available, but it is likely the Department of Commerce will move quickly to choose recipients to distribute the $24 billion allocated for fiscal year 2022.

In addition to the direct investment provisions, the bill also provides a substantial tax credit for investment in advanced manufacturing. This provision will provide a 25% investment tax credit for investments in semiconductor manufacturing. The tax credit covers both the construction of facilities and the costs of specialized tools and equipment needed to manufacture semiconductors. The credit is available for assets placed in service after December 31, 2022 and whose construction begins before January 1, 2027.

US semiconductor producers and manufacturers have much to gain directly from the CHIPS Plus package, with numerous downstream benefits also expected for chip manufacturing equipment, service and software vendors, chip designers, the EDA tool companies and a number of other American companies. at the cutting edge of semiconductor technology.

This historic infusion of federal investments in the US semiconductor industry is expected to generate significant activity for domestic companies involved in all stages of semiconductor design, development and manufacturing.

Investments in STEM research

The CHIPS Plus package also includes a significant five-year investment in public R&D to increase America’s competitiveness in the global supply chain in areas such as advanced manufacturing, next-generation communications, computer technologies and energy. These provisions are intended, among other things, to ensure increased and equitable participation of underrepresented populations and geographic areas in federally funded research projects. The bill authorizes substantial increases in funding for the National Science Foundation (NSF), National Institute of Standards and Technology (NIST), Department of Commerce (DOC), and Department of Energy (DOE) to engage in R&D activities and partnerships.

The main provisions include:

  • Strategic Translation Science: Authorizes a $20 billion investment over five years in the NSF’s Technology, Innovation and Partnerships (TIP) Directorate to accelerate the development of emerging technologies, such as artificial intelligence, computing quantum, advanced manufacturing and 6G communications.
  • Expansion of EPSCoR funding: directs the NSF to dedicate an increasing amount of funding in major research accounts to universities in program jurisdictions of the Established Program to Stimulate Competitive Research (EPSCoR). EPSCoR jurisdictions are 25 states and three territories where institutions struggle to compete with larger states for federal research funds. Under this provision, the NSF must ensure that EPSCoR jurisdictions have at least 20% of federal funding available for research by FY2029. This provision will also establish a pilot program requiring multi -institutions requesting funding greater than $1 million be submitted in partnership with an emerging research institution or a minority-serving institution.
  • Regional drivers of innovation: Providing $10 billion over five years to the Department of Commerce to establish regional innovation engines to advance multidisciplinary, collaborative, use- and translation-inspired research, and technology development in key technology areas.
  • Support for small manufacturers: Authorizes $2 Billion in Funding through NIST to Support Small and Medium Manufacturers by Providing Resources to Advance Workforce Development, Build Resilience in National Supply Chains, Expand Adoption advanced technology upgrades (including cybersecurity upgrades).
  • Foundation for Energy Security and Innovation: Authorizes spending of $40.5 million to establish a Foundation for Energy Security and Innovation (FESI) at DOE to foster partnerships with industry, startups, and outside funding agencies to support the creation, development and commercialization of technologies to address emerging energy challenges.

While many specific provisions of these and other programs will require agency guidance to implement, there will certainly be opportunities for partnerships between research agencies and higher education institutions, non-profit organizations non-profit and industry.