The CHIPS Act passed. $52 billion for American

The CHIPS and Science Act passed the Senate 64-33 and Biden signed it this week. $52 billion in subsidies and incentives for semiconductor manufacturing on American soil.

The short version: the US realized that having 92% of the world’s most advanced chips made in Taiwan is a strategic vulnerability, and decided to spend serious money fixing it.

The long version is more complicated. And messier.

What $52 billion buys

A modern leading-edge fab costs $15-20 billion. So $52 billion sounds like it buys three fabs, roughly. But the money isn’t all direct construction subsidies. It includes research funding, workforce training, tax credits, and grants.

The factories are already being planned:

TSMC is building in Phoenix, Arizona. Two fabs. The first is a 4nm facility expected to start production in 2024. The second will use 3nm technology.

Intel is building in New Albany, Ohio. Two fabs initially, with space for up to eight. This is the largest single private-sector investment in Ohio history.

Samsung is expanding in Taylor, Texas. An advanced logic fab targeted at 5nm and below.

These are enormous projects. Thousands of construction workers. Billions in equipment. Years of build time.

The hard parts

Money is the easy part. The hard parts are water, talent, and culture.

Water: leading-edge fabs use millions of gallons of ultrapure water per day. Arizona is in a drought. Building the world’s most water-intensive factories in one of the driest states in the country is a choice that will require creative solutions. Or painful tradeoffs.

Talent: the US doesn’t have enough semiconductor engineers. We’ve spent decades offshoring the expertise. You can’t rebuild a workforce in the two years between a bill signing and a fab opening. TSMC is reportedly bringing Taiwanese engineers to Arizona, which solves the immediate problem but creates new ones.

Culture: semiconductor manufacturing culture in Taiwan, South Korea, and Japan is intense. Long hours. Deep specialization. A willingness to optimize relentlessly. American manufacturing culture is different. Not worse, necessarily. Just different. Merging these cultures in a factory where a single particle of dust can ruin a wafer is going to be an adjustment for everyone.

The Commerce Department will distribute the funds over several years. The results won’t be visible for half a decade. And by then, the geopolitical situation that motivated the investment may look entirely different.

Why it matters

I keep coming back to a simple fact: a modern society cannot function without chips. Cars, phones, medical devices, power grids, communications networks, weapons systems. All of it depends on silicon fabricated in extremely complex factories that take years to build and require a concentration of specialized expertise that exists in only a few places on Earth.

The CHIPS Act is the US government acknowledging that this dependency is dangerous. Whether $52 billion is enough, whether the execution will work, whether the fabs will deliver chips at competitive prices, all of that is uncertain.

But the acknowledgment itself is significant. The US is treating semiconductor manufacturing as a matter of national security for the first time since the industry moved offshore. That’s new. And it’s going to reshape the geography of the technology that runs everything.

Messy, expensive, slow. But probably necessary.

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