Explainer: The CHIPS and Science Act 2022

After two years of negotiation, Congress passed the CHIPS and Science Act of 2022 which was signed into law by President Biden on 9 August 2022. The act authorises US$280 billion (AU$410.6 billion) funding to shore up semiconductors, perhaps the United States’ greatest vulnerability when it comes to securing supply chains, and to drive the US-led invention of frontier technologies ahead of its global competitors.

The CHIPS and Science Act contains the largest investment in US research and development (R&D) — a key building block of innovation — in US history.

The legislation’s historic federal investments represent a seismic shift in the US approach to the funding and composition of its innovation, technology, and manufacturing sector. The act contains the largest investment in US research and development (R&D) — a key building block of innovation — in US history. It is also one of the largest single investments in US manufacturing in decades, allocating over 100 times more public investment into the nation’s chip industry than the major government investment in semiconductors, the SEMATECH initiative founded in 1987, when the United States faced semiconductor market competition with Japan.

Commanding bipartisan support for such a sizeable bill in the House (243-187) and the Senate (64-33), even amid record levels of inflation, the CHIPS and Science Act represents a decisive departure from the market-led economic thinking that dominated US policymaking since the 1980s, and a clear embrace of a strategic, government-led economic intervention — an industrial policy — in the US advanced technologies sector.

This brief examines the contents of the legislation as well as its strategic intent and implications for Australia.

For the full explainer, read on the United States Studies Centre website (linked).