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Here’s How the ‘Chips Act’ Seeks to Deliver More than $280 billion to the Semiconductor Industry

Así es como la "Ley Chips" busca entregar más de $280,000 millones a la industria del semiconductor

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The U.S. House of Representatives passed the Chips and Science Act, also known as the “Chips Act,” which would allocate $280 billion to boost the U.S. semiconductor industry.

The bill was supported by the entire Democratic Party and 17 Republican representatives. The vote ended with 238 votes in favor of the legislation and 187 against.

What will the Chips Act money be used for?

The Science and Chips Act of 2022 will allocate more than $52.7 billion in direct funding for the construction and expansion of semiconductor manufacturing plants.

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In addition, $24 billion will be allocated to provide tax incentives for semiconductor manufacturing companies.

The legislation also creates a 25% tax credit for companies that invest in semiconductor manufacturing.

Finally, $200 billion will go to fund science and technology research over the next few years.

The money will be distributed across government agencies for research. The National Science Foundation (NSF) will receive $81 billion in funding from that amount.

The bill passed by the House of Representatives also proposes to create a Directorate of Technology and Innovation and other offices to oversee the implementation of spending for the programs created by the legislation.

Among the entities that the law would create would be new technology centers at universities and scholarships for careers in science, technology, and mathematics.

It also supports elementary and secondary education by developing science, technology, engineering, and mathematics programs.

America could send people to the moon again under the Chips Act

The legislation authorizes appropriations for the National Aeronautics and Space Administration, better known as NASA, to restart the Artemis program, which aims to return humans to the moon.

Following its typical trend, the Democrat Party has included in the legislation that the next trip to the moon should have a woman and a person of color among its crew. This request does not represent a problem for NASA since it has consistently been recognized as an inclusive agency.

The Chips Act aims to beat China in the technology race

The bill prohibits funds from going to any organization that is linked to China in any way. Companies cannot use the money to expand their production capabilities on Chinese soil, and universities that have partnerships with the Confucius Institute will not get research budgets from the bill.

The Chips Act comes at a time when several U.S. producers have seen their production delayed by semiconductor shortages and shutdowns by Covid in China.

Driven by fears of a potential blockade of its semiconductors and other manufacturing goods sources —as a means of pressure in the event of a potential conflict over Taiwan — the United States seeks to reduce its technological dependence on China and Taiwan. 

The complex and costly semiconductor manufacturing process

The microchip fabrication process is slow, complex, and expensive, requiring clinically precise equipment, highly educated professionals, and extremely clean environments. It can take up to three months to convert delicate silicon mirrors into functional semiconductors.

Microchip factories, known as Foundries, can take years to get up and running, requiring capital investments in t billions of dollars.

Like aviation, the semiconductor industry is one of the few highly subsidized by governments that can afford it because of its strategic importance to the functioning of the modern world.

 

 

 

 

 

Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica

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