The U.S. ‘CHIPS Act of 2022’ (Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022) – It has worked
The CHIPS Act of 2022 is a landmark piece of legislation designed to reinvigorate the U.S. semiconductor industry, reduce dependency on foreign supply chains, and improve national security.
The CHIPS Act allocated $52.7 billion to semiconductor manufacturing, research, and workforce development, alongside $24 billion in tax credits to incentivize chip production within the United States. Key provisions included the establishment of the National Semiconductor Technology Center (NSTC) to spearhead advanced research and significant manufacturing incentives to encourage domestic fabrication plant construction.
We can compare it with the objectives of the European Union's Chips Act, enacted in September 2023, that aims to enhance Europe's semiconductor industry by mobilizing €43 billion in public and private investments through 2030. This initiative seeks to double the EU's global market share in semiconductors from 10% to at least 20% by 2030. The EU's approach combines a relatively modest direct budget allocation with significant expected contributions from Member States and private investments.
Since its implementation, the CHIPS Act has fueled major investments from leading semiconductor companies. Intel, Taiwan Semiconductor Manufacturing Company (TSMC), and Samsung have committed billions to new fabrication plants, with TSMC’s $40 billion investment in Arizona marking one of the largest foreign direct investments in U.S. history. These initiatives are expected to generate thousands of jobs, with estimates suggesting around 93,000 construction jobs and 43,000 permanent positions. Moreover, the National Science Foundation has awarded over 760 grants aimed at strengthening research and workforce development, ensuring that American semiconductor capabilities remain at the forefront of global innovation.
However, the CHIPS Act has not been without its critics. The sheer cost of implementation has raised concerns about its return on investment. A shortage of skilled labor threatens to slow the completion and operational efficiency of new manufacturing facilities, exacerbating an already tight labor market in advanced manufacturing.
As the semiconductor landscape continues to evolve, discussions are emerging around a potential successor to the CHIPS Act. Industry leaders are advocating for expanded support for foundational and legacy semiconductors, in addition to cutting-edge chip technologies. Ensuring that policy decisions remain adaptive to market needs and technological advancements will be crucial in sustaining the momentum of this legislative initiative.
Has the EU been left behind despite the Chips Act?
The European Union’s Chips Act was designed to bolster Europe’s semiconductor industry, enhance technological sovereignty, and reduce dependency on foreign supply chains. With a total investment plan of €43 billion, the Act aims to double the EU’s global market share in semiconductors from 10% to 20% by 2030. However, despite these ambitious goals, concerns persist about whether the EU has already fallen behind global competitors—especially the United States and East Asian powerhouses such as Taiwan, South Korea, and China.
One key reason the EU has struggled to keep pace is the financial structure of its Chips Act compared to the U.S. CHIPS Act. While the U.S. allocated $52.7 billion directly to semiconductor manufacturing, research, and workforce development—alongside $24 billion in tax incentives, the EU’s funding relies heavily on Member States and private investment. Only €3.3 billion of the EU's Chips Act comes directly from the European Commission, with the remainder expected to be mobilized through national governments and industry players.
Europe has a historical reliance on legacy and specialty semiconductor production, focusing on areas such as automotive chips and power electronics. However, cutting-edge, high-performance semiconductor fabrication, such as those used in AI, cloud computing, and advanced consumer electronics, is still dominated by TSMC (Taiwan), Samsung (South Korea), and Intel (USA).
While TSMC, Intel, and other industry leaders have announced plans to build fabrication plants in Europe, these projects are still in the early stages. Meanwhile, the U.S. has already seen major progress in the construction of semiconductor facilities in Arizona, Texas, and Ohio, fueled by the CHIPS Act.
Another critical challenge is Europe’s semiconductor workforce shortage. The semiconductor industry requires highly specialized skills in chip design, nanotechnology, and advanced manufacturing, but Europe has struggled to cultivate a pipeline of talent in these areas. The U.S., with its network of leading technology universities and industry partnerships, has a more developed ecosystem to attract and train semiconductor engineers.
Europe’s semiconductor strategy has been less aggressive in geopolitics compared to the U.S. and China. While the U.S. CHIPS Act includes strict measures limiting chip exports to China and fostering national security interests, the EU has been less assertive in defining its role in the global semiconductor supply chain. This softer stance may have hindered Europe's ability to secure priority investments from leading chipmakers.
While the EU Chips Act is an essential step toward semiconductor sovereignty, it faces significant structural and financial challenges that have hindered rapid progress. The reliance on Member States for funding, slow approval processes, and a lack of cutting-edge manufacturing capabilities have placed the EU behind the U.S. and East Asia in the semiconductor race. If Europe wants to achieve its goal of 20% global market share by 2030, a more aggressive, centralized, and flexible approach will be necessary to accelerate investment, innovation, and infrastructure development.
As global competition intensifies and challenges persist, policymakers and industry leaders must debate whether a ‘Chips Act 2.0’ is necessary to ensure Europe remains competitive in the semiconductor race.
A Chips Act 2.0 could provide more centralized EU funding instead of fragmented national contributions, ensuring a faster and more coordinated response to industry needs.
A Chips Act 2.0 could include new educational initiatives and partnerships between universities and chip manufacturers, even a talent visa program to attract global semiconductor professionals.
One of the key criticisms of the existing Chips Act is the slow approval process for state aid and subsidies. For example, Germany’s €20 billion funding for Intel’s Magdeburg facility took months of negotiations, delaying crucial investments. The U.S., in contrast, fast-tracked funding approvals under the CHIPS Act, allow for quicker project implementation. A Chips Act 2.0 could introduce simplified approval mechanisms for semiconductor subsidies at the EU level, and a streamlined process for public-private partnerships to accelerate facility construction.
While the first EU Chips Act is a critical step toward strengthening Europe’s semiconductor industry, it is not going to ensure long-term competitiveness. In our humble opinion, as Europe is serious about becoming a global leader in chip manufacturing, a Chips Act 2.0 is required.
The ‘CHIPS Act of 2022’ - The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022
The CHIPS Act was signed into law on August 9, 2022. It boosts US competitiveness, innovation, and national security. It also deals with leading-edge technologies, such as quantum computing, AI, and nanotechnology.
Important definitions, from SEC. 10002
ARTIFICIAL INTELLIGENCE. — The term ‘artificial intelligence’ or ‘AI’ has the meaning given such term in section 5002 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 9401).
Note: According to section 5002 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 9401):
ARTIFICIAL INTELLIGENCE. — The term ‘‘artificial intelligence’’ means a machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments. Artificial intelligence systems use machine and humanbased inputs to—
(A) perceive real and virtual environments;
(B) abstract such perceptions into models through analysis in an automated manner; and
(C) use model inference to formulate options for information or action.
BIOMANUFACTURING. — The term ‘‘biomanufacturing’’ means the utilization of biological systems to develop new and advance existing products, tools, and processes at commercial scale.
ENGINEERING BIOLOGY. — The term ‘‘engineering biology’’ means the application of engineering design principles and practices to biological systems, including molecular and cellular systems, to advance fundamental understanding of complex natural systems and to enable novel or optimize functions and capabilities.
QUANTUM INFORMATION SCIENCE. — The term ‘‘quantum information science’’ has the meaning given such term in section 2 of the National Quantum Initiative Act (15 U.S.C. 8801).
Note: According to the National Quantum Initiative Act (15 U.S.C. 8801), the term "quantum information science" means the use of the laws of quantum physics for the storage, transmission, manipulation, computing, or measurement of information.
Some interesting parts of the Act:
Subtitle B—Measurement Research
Note: According to SEC. 10201, the term ‘Director’ means the Director of the National Institute of Standards and Technology (NIST).
SEC. 10221. ENGINEERING BIOLOGY AND BIOMETROLOGY.
(a) IN GENERAL.—The Director, in coordination with the National Engineering Biology Research and Development Initiative established pursuant to title IV, shall—
(1) support basic measurement science and technology research for engineering biology, biomanufacturing, and biometrology to advance—
(A) measurement technologies to support foundational understanding of the mechanisms of conversion of DNA information into cellular function;
(B) technologies for measurement of such biomolecular components and related systems;
(C) new data tools, techniques, and processes to improve engineering biology, biomanufacturing, and biometrology research; and
(D) other areas of measurement science and technology research determined by the Director to be critical to the development and deployment of engineering biology, biomanufacturing and biometrology;
(2) support activities to inform and expand the development of measurements infrastructure needed to develop technical standards to establish interoperability and facilitate commercial development of biomolecular measurement technology and engineering biology applications;
(3) convene industry, institutions of higher education, nonprofit organizations, Federal laboratories, and other Federal agencies engaged in engineering biology research and development to develop coordinated technical roadmaps for authoritative measurement of the molecular components of the cell;
(4) provide access to user facilities with advanced or unique equipment, services, materials, and other resources to industry, institutions of higher education, nonprofit organizations, and government agencies to perform research and testing;
(5) establish or expand collaborative partnerships or consortia with other Federal agencies engaged in engineering biology research and development, institutions of higher education, Federal laboratories, and industry to advance engineering biology applications; and
(6) support graduate and postgraduate research and training in biometrology, biomanufacturing, and engineering biology.
SEC. 10224. SOFTWARE SECURITY AND AUTHENTICATION.
(a) VULNERABILITIES IN OPEN SOURCE SOFTWARE. — The Director shall assign severity metrics to identified vulnerabilities with open source software and produce voluntary guidance to assist the entities that maintain open source software repositories to discover and mitigate vulnerabilities.
(b) ARTIFICIAL INTELLIGENCE-ENABLED DEFENSES. — The Director shall carry out research and testing to improve the effectiveness of artificial intelligence-enabled cybersecurity, including by generating optimized data sets to train artificial intelligence defense systems and evaluating the performance of varying network architectures at strengthening network security.
Subtitle G — Directorate for Technology, Innovation, and Partnerships
SEC. 10381. ESTABLISHMENT.
There is established within the Foundation the Directorate for Technology, Innovation, and Partnerships to advance research and development, technology development, and related solutions to address United States societal, national, and geostrategic challenges, for the benefit of all Americans.
SEC. 10382. PURPOSES.
The purposes of the Directorate established under section 10381 are to—
(1) support use-inspired and translational research and accelerate the development and use of federally funded research;
(2) strengthen United States competitiveness by accelerating the development of key technologies; and
(3) grow the domestic workforce in key technology focus areas, and expand the participation of United States students and researchers in areas of societal, national, and geostrategic importance, at all levels of education.
SEC. 10383. ACTIVITIES.
Subject to the availability of appropriated funds, the Director shall achieve the purposes described in section 10382 by making awards through the Directorate that—
(1) support transformational advances in use-inspired and translational research and technology development, including through diverse funding mechanisms and models at different scales, to include convergence accelerators and projects designed to achieve specific technology metrics or objectives;
(2) encourage the translation of research into innovations, processes, and products, including by—
(A) engaging researchers on topics relevant to United States societal, national, and geostrategic challenges, including by educating researchers on engaging with end users and the public;
(B) advancing novel approaches and reducing barriers to technology transfer, including through intellectual property frameworks between academia and industry, nonprofit entities, venture capital communities, and approaches to technology transfer for applications with public benefit that may not rely on traditional commercialization tools; and
(C) establishing partnerships that connect researchers and research products to businesses, accelerators, and incubators that enable research uptake, prototype development and scaling, entrepreneurial education, and the formation and growth of new companies;
(3) develop mutually-beneficial research and technology development partnerships and collaborations among institutions of higher education, including historically Black colleges and universities, Tribal Colleges or Universities, minorityserving institutions, emerging research institutions, EPSCoR institutions, and nonprofit organizations, labor organizations, businesses and other for-profit entities, Federal or State agencies, local or Tribal governments, civil society organizations, other Foundation directorates, national labs, field stations and marine laboratories, and, as appropriate, international entities and binational research and development foundations and funds, excluding foreign entities of concern;
(4) partner with other directorates and offices of the Foundation for specific projects or research areas including—
(A) to pursue basic questions about natural, human, and physical phenomena that could enable advances in the challenges and key technology focus areas under section 10387;
(B) to study questions that could affect the design (including human interfaces), safety, security, operation, deployment, or the social and ethical consequences of technologies and innovations in the challenges and key technology focus areas under section 10387, including the development of technologies and innovations that complement or enhance the abilities of workers and impact of specific innovations on domestic jobs and equitable opportunity; and
(C) to further the creation of a domestic workforce capable of advancing, using, and adapting to the key technology focus areas;
(5) build capacity and infrastructure for use-inspired and translational research at institutions of higher education across the United States, including by making awards to support administrative activities that advance development, operation, integration, deployment, and sharing of innovation;
(6) support the education, mentoring, and training of undergraduate students, graduate students, and postdoctoral researchers, to both advance use-inspired and translational research and to address workforce challenges, through scholarships, fellowships, and traineeships; and
(7) identify social, behavioral, and economic drivers and consequences of technological innovations that could enable advances in the challenges and key technology focus areas under section 10387.