After months of debate, the CHIPS and Science Act was passed by the US Congress on Thursday. But what is it, and what impact will it have on our electronic devices?
What is the CHIPS law?
The CHIPS and Science Act of 2022, commonly abbreviated as the CHIPS Act or HR 4346, is a bill that received bipartisan support from the House of Representatives and the Senate. The latest iteration passed the House on Thursday, with 243 votes in favor and 187 votes against, and is awaiting President Joe Biden’s signature before becoming law — it may already have been signed by the time you read this.
The centerpiece of the CHIPS Act, and where the acronym comes from, is the “Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Fund”. The bill provides more than $52 billion in grants to “support the development and adoption of secure and reliable telecommunications technologies, secure semiconductors, secure semiconductor supply chains and other emerging technologies”. This money is intended to finance the construction of semiconductor manufacturing plants, or “fabs” for short, in the United States.
The bill also aims to boost education and scientific work in the United States, including creating several “carbon materials research center” sites, coordinating climate research between NOAA, NASA and other agencies, improving STEM education programs, improving the Energy Science Network and Suite. The entire CHIPS Act is over 1,000 pages.
President Biden has repeatedly endorsed the bill, saying “It unlocks significant investments in American science and technology that will fuel our economy and our national security for decades to come.” Unsurprisingly, chipmakers are also thrilled. Intel CEO Pat Gelsinger called it a “critical step in supporting the entire US semiconductor industry.”
Why does the CHIPS law exist?
For the past few years, modern semiconductor chips – needed for all modern electronic devices, from smartphones to trucks – have been in short supply. Limited production capacity, growing demand for electronics, political disputes and supply chain issues due to the COVID-19 pandemic are all contributing factors. The shortage has made graphics cards hard to come by (which is finally starting to change), automakers omitting certain features from new cars, rising costs for certain computer components, and other issues.
There are many manufacturing plants in the world, but most of them can only manufacture larger knot sizes, while smaller knot sizes are more desirable for new products. For example, Intel processors from a few years ago (like the Core i5-8250U) were built on a 14nm process, but the Snapdragon 8 Gen 1 chipset used in the Galaxy S22 is built on a 4nm process. . Smaller processes allow chips to operate at higher speeds and improve power efficiency – crucial factors for modern electronics, especially portable devices. Apple’s M2 chipset, found in the new MacBook Air, uses 5nm technology from Taiwan Semiconductor Manufacturing Company (TSMC). It is also the same company that produces most AMD processors, chips for Nvidia and AMD graphics cards, some Intel chips, and many other products.
Only a few factories worldwide can produce chips with smaller processes, so when one of them has problems (like Taiwan dealing with water shortages), it has ripple effects on the whole Supply Chain. That’s why it’s important to build more factories in more places around the world.
There are other political factors involved in the production of chips. Taiwan, where TSMC and most of the company’s factories are based, is at the center of escalating political tensions between China and the United States. Many other crucial factories are in mainland China, which is still in a trade war with the United States. Geopolitical relations are far beyond the competence of Practical Geekbut put simply, many government officials in the US would prefer to be less dependent on importing chips from other countries – that’s why the CHIPS Act gives companies money to build factories in the US .
Is the CHIPS law important for me?
Businesses and governments have many reasons to be concerned about CHIPS, but what about us? What will this change in our everyday life? Well, it’s harder to answer now.
We know for sure that the CHIPS law will not change anything in the near future. It takes years to plan and build new chip factories. However, if the new factories provide more manufacturing capacity as expected, it could drive down the price of semiconductor chips and lead to cheaper electronics. Diversified production could also reduce future chip shortages.
The promised outcome hinges on more devices switching to US-made chips, primarily from Intel, which is currently building two chip factories in Ohio. Intel can’t yet match the more advanced chip production lines from TSMC and Samsung, and the company has suffered multiple delays with new chips.
In short, we will have to wait and see.
Note: The author of this article owns stock in AMD, a chipmaker.