After nearly two years and multiple iterations, Congress recently passed a sweeping piece of bipartisan legislation aimed at bolstering domestic semiconductor manufacturing, as well as making key investments in research and development. The New England Council was proud to support the CHIPS and Science Act and we believe that its passage is a huge win for the New England innovation economy.
First and foremost, this new law makes over $50 billion in investments to bolster the U.S. semiconductor manufacturing industry. Over the past several years, our nation has experienced a critical shortage of semiconductor chips. The shortage is the result of a perfect storm of circumstances, including a variety of supply chain constraints combined with an increased demand for electronics to support remote work and schooling amid the pandemic. Semiconductors enable the key technologies driving the future economy and our national security, including artificial intelligence, quantum computing, cloud services, and more. The New England region is home to numerous semiconductor manufacturers – including industry leaders such as Analog Devices Inc. and Texas Instruments Inc. – as well as a wide array of technology businesses that rely on semiconductors to support continued innovation and growth. So the impact of this shortage on our region has been significant.
At the same time, the percentage of modern semiconductor manufacturing capacity located in the U.S. has declined significantly from 37% in 1990 to just 12% today, according to the Semiconductor Industry Association. This is due in large part to the fact that other countries such as China, India and South Korea have invested in chip manufacturing incentives, while the U.S. has not. Federal investment in chip research has also remained stagnant in the U.S. while other nations have ramped it up.
The CHIPS and Science Act will make significant strides to address the shortage and increase domestic capacity by providing $52 billion in subsidies for U.S. semiconductor production, as well as an investment tax credit for chip plants estimated to be worth $24 billion. The new law also authorizes more than $170 billion over five years to boost U.S. scientific research to better compete with China.
Beyond this vital support for the semiconductor industry, the act also makes several other important investments that will support continued growth in the New England innovation economy. It authorizes $81 billion in funding over five years for the National Science Foundation to support science, technology, engineering and mathematics education, establish regional technology hubs and support a new technology directorate that aims to turn basic research breakthroughs into real-world applications. New England is, of course, home to some of the world’s leading research institutions and received nearly $800 million in NSF funds in 2021, including over $60 million in Rhode Island alone. Our region will undoubtedly benefit from this additional infusion of NSF funding.
In addition to this critical funding for the NSF, the measure also provides research funding for the U.S. Department of Commerce, the Department of Energy, NASA, and the National Institutes of Standards and Technology to increase investments in research and development.
The New England Council is grateful to the many members of the region’s congressional delegations who supported this important legislation, including Rhode Island’s delegation, Sens. Jack Reed and Sheldon Whitehouse and Reps. David N. Cicilline and James R. Langevin. The investments in this bill will breathe new life into domestic semiconductor manufacturing, make our nation more competitive on the global stage and spur new research and scientific breakthroughs that will no doubt have a lasting impact for many years to come.
James T. Brett is the CEO and president of The New England Council, a regional alliance of businesses, nonprofit organizations, and health and educational institutions supporting economic growth and quality of life in New England.
