The loss of funding under the Chips and Science Act of 2022 could mean companies will retreat from investments they’re making in the U.S., experts said Thursday during an Information Technology and Innovation Foundation webinar. Advanced chips are critical to smartphones and many other devices made and sold in the U.S., they noted. Few smartphones are made in the U.S., but chips are integral to other wireless gear manufactured here. Experts also said investment in chip research helps drive innovation in the communications sector.
CHIPS Act
The CHIPS and Science Act is a U.S. law signed by President Biden in August 2022. The act authorized approximately $280 billion in funding for domestic research and manufacturing of semiconductors. It included $39 billion to subsidize chip manufacturing in the U.S. and a 25% tax credit for the cost of manufacturing equipment. The bill provided $13 billion for semiconductor research and workforce training. It also invested $174 billion in public sector research in science and technology. The bill was intended to strengthen the resilience of American supply chains and to counter China.
The Chips and Science Act of 2022, which has successfully funded the launch of U.S. facilities where chips are made, and it's unlikely President Donald Trump will reverse its work, experts said Wednesday during a Broadband Breakfast webinar. Trump was sharply critical of the act as a presidential candidate, saying that subsidies were a bad idea (see 2412090046).
Commerce Secretary Gina Raimondo warned Saturday that “rhetoric” on China is no substitute for the hard work of making the U.S. a stronger competitor in areas like semiconductor chips, which are critical to the U.S. wireless and other industries. “Today, more than ever, national security requires technological security, requires the United States to lead … all of our competitors in technology, particularly in AI and semiconductors, and requires secure supply chains,” she told the Reagan Defense Forum in California. Raimondo was asked about President-elect Donald Trump's comments, made during the campaign, that he opposes subsidies in the Chips and Science Act of 2022 and that the act was a bad deal for the U.S., Responding to calls for overturning the act, Raimondo said, “It’s a horrific idea. It’s a reckless idea. ... Sometimes you say things on the stump, and I can only hope that was something to be said on the stump and won’t be acted out.” In November, House Speaker Mike Johnson, R-La., noted interest in having the House repeal the Chips Act but reversed course following a bipartisan outcry (see 2411040062). Raimondo noted that 100% “of leading-edge chips used in fighter jets, AI technology, nuclear simulation, drones” are made in China and Taiwan. By the end of the year, the department expects to complete $35 billion of the $39 billion allocated in awards to 26 companies to build plants in the U.S. In addition, it expects it will award nearly all $11 billion targeted for research funding. “We’re getting the job done,” she said. "It has been brutally difficult.” Taiwan’s TSMC makes 100% of the world’s most sophisticated chips and people said the company would never expand in the U.S., Raimondo said: “Wrong -- they’re doing it” and TSMC is building three facilities in Arizona. “It’s an incredible thing, and you’re all safer because of it.” Raimondo said ultimately the U.S. will need to invest more to compete with China. She noted that China is now building 21 semiconductor factories. Permitting reforms are critical, she noted. “It can’t take two years to go through permitting in order to build a factory -- that is not competitive."
The incoming Donald Trump administration "could ... significantly scale back, or even dismantle" programs funded under the Infrastructure Investment and Jobs Act and the Chips Act, along with routine government expenditures, Pillsbury lawyers blogged Wednesday. They said it's likely the Trump White House will try diverting appropriated funds toward preferred policy priorities. In addition, the incoming administration might refuse to spend funds Congress appropriated and so "'starve' disfavored agencies or offices and further cost-cutting initiatives."
As states gear up to spend tens of billions on subsidizing broadband network expansions, some also plan on designating public funds for "wraparound services," such as transportation and childcare for the broadband deployment workforce. Our analysis of states' broadband equity, access and deployment (BEAD) program volume 2 plans found many states saying they will prioritize subgrant applicants that provide such services. Wireless Infrastructure Association President Patrick Halley told us states that anticipate or potentially could have funds remaining from BEAD deployment activities must begin thinking about using that money, including putting it toward workforce development needs.
AI is “part of everything” and will only grow in importance, but the U.S. is falling behind other countries in developing AI policy, Rep. Suzan DelBene, D-Wash., said Thursday during the Augmented and Virtual Reality Conference. “Innovation and technology are moving forward and policy is falling further and further behind,” DelBene said. The Information Technology and Innovation Foundation and the Extended Reality Association (XR) sponsored the conference at the AT&T Forum.