The Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act: What it Means for the Unite d States Economy and its Foreign Relations

The Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act represents a growing domestic and international policy interest in the production/manufacture and procurement of semiconductors. While the United States has historically led the world in advanced semiconductor development, an astounding majority of advanced semiconductors used in artificial intelligence and supercomputers are now produced abroad, namely Taiwan. As COVID-19 crippled global supply chains and tensions between the People’s Republic of China and the United States have grown, the Biden Administration passed the CHIPS Act to incentivize foreign and domestic semiconductor producers to build factories stateside. While the promise of multimillion dollar government grants has certainly convinced such firms to build campuses across America, following legislation and American initiatives restricting trade with certain countries have born new competition between the U.S. and China as well as some friendly, chip-producing nations, such as Japan, South Korea, and even Taiwan.

Though many Americans see the CHIPS Act as a boon towards bolstering fragile supply of an important commodity, international reactions have varied, and the CHIPS Act has drastically changed the global semiconductor landscape for the foreseeable future.