Will the CHIPS Act Make the U.S. a Winner in the Semiconductor Race?

Taylor, Texas, which is about 40 minutes northeast of downtown Austin, has a population of less than 20,000 people. Nonetheless, it’s recently drawn some huge investments. Tech giant Samsung is building a $40 billion plant there, boosted by a $6.4 billion investment from the federal CHIPS and Science Act. The town is undergoing a growth spurt even before any of the promised 2,000 jobs at the plant have been created.

In contrast with expansions planned at existing microchip fabrication plants, or “fabs,” the plant at Taylor is brand new. Building a plant from the ground up has required a significant labor force, with the town’s population expected to double. Roughly 18,000 jobs are expected to be created directly or indirectly by construction needs alone, according to the state Department of Commerce.

Already in Taylor, local businesses are seeing an uptick in customers, with some small business owners eying the area for possible relocation. The University of Texas will build a satellite campus near the chip plant.

The CHIPS Act, which was passed in 2022, was prompted partly by the blows the pandemic delivered to the global supply chain and a shortage of semiconductors from Asia. Since they’re used in everything from smartphones and gaming consoles to cars and military technology, their value created concern among lawmakers about future disruptions.

“The whole point of the CHIPS Act is to spur domestic manufacturing of semiconductors,” says Jack Conness, a policy analyst for Energy Innovation who’s tracking manufacturing investments from CHIPS and the federal Inflation Reduction Act. “Semiconductors in general make the world spin at this point. They have major impacts on clean energy, national security and defense.”

Still a Long Road

It may be a long road to implementation, with the majority of proposed and promised projects still very much in their infancy. Much of the investment will go to development of massive facilities in places that aren’t already well-established players in the tech industry. For a big business such as the Taiwan Semiconductor Manufacturing Company (TSMC), that prompts worries about finding and recruiting the workforce to handle advanced manufacturing.

The company announced plans to build a facility in Arizona back in 2020 and start construction the following year. But TSMC Chairman Mark Liu said last year that the plant won’t begin production until 2025, all due to what he called a lack of employees with “specialized expertise required for equipment installation in a semiconductor-grade facility.”

Where existing facilities are expanding, however, success may come sooner. “There’s a lot of success right now in New York state,” Conness says, with IBM and Micron already established. “Those are facilities that are already there, so it’s further upgrading, expanding and just revamping those facilities in locations that were already up and going.”