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Creating Helpful Incentives To Produce Semiconductors, or CHIPS Act

President Joe Biden signed Creating Helpful Incentives To Produce Semiconductors Act into law on August 9, 2022, as part of the larger Defense Authorization Act.

The CHIPS and Science Act provides $52.7 billion for American semiconductor research, development, manufacturing and workforce development. These funds are distributed like this:

  • $39 billion in production incentives, including $2 billion for the legacy chips used in
  • automobiles and defense systems
  • $13.2 billion in research and workforce development
  • $500 million for international communications technology security and semiconductor supply chain



The law also provides a 25% tax credit for semiconductors manufacturing equipment and carries $2 billion for defense-specific funds through 2027, according to a report by McKinsey & Company, a consultancy. Additionally, it seeks to foster development of dual-use and custom semiconductors for defense, as well as packaging and integration technologies. Supply chains for all these components should be secured.

Another concern is bringing ideas from design to manufacture, crossing the Valley of Death. The Department of Defense has established eight regional innovation hubs linked to educational institutions, according to a release.

These hubs will focus on:

  • Secure Edge/Internet of Things (IoT) Computing
  • 5G/6G
  • Artificial Intelligence (AI) Hardware
  • Quantum Technology
  • Electromagnetic Warfare
  • Commercial Leap Ahead Technologies

Other programs supply additional funding for research and development with various opportunities for receiving incentives for qualifying companies.

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