CHIPS Act signed into law to rival China, prevent next PS5 shortage

12% of chips are made in the US today. In the 1990s it was 37%. That became a major headache with a global chip shortage

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➡️ The Shortcut Skinny

• 📝 CHIPS and Science Act of 2022 signed into law to boost US chipmaking

• 📉 Today: just 12% of chips are made in the US; In the 90s: it was 37%

• 💰 $280 billion in total funding and tax credits for domestic chip production

• 🏗️ Qualcomm already buying $4.2b in chips from GlobalFoundries’ NY factory

• 😓 Could prevent another global chip shortage, but it’ll take time

The bipartisan CHIPS Act bill was signed into law by President Biden today in order to reduce the United States’ reliance on China for chip production, reclaim domestic semiconductor manufacturing and prevent the next global chip shortage.

No, the CHIPS and Science Act of 2022 and its $280 billion in total funding won’t help with the current PS5 restock situation (the Sony PlayStation 5 console is expected to be in short supply until 2023, after Black Friday and Cyber Monday). But it does earmark $52 billion and billions more in tax credits for semiconductors firms in the US.

Reclaiming lost dominance

According to the bill, “only 12% of chips are currently manufactured [in the US], compared to 37% in the 1990s.” The US has seeded control of chip manufacturing to China and other countries. Specifically, the CHIPS Act intends to limit the dominance of companies like Huawei, which it says has close ties to China’s Communist Party.

Importantly, the CHIPS Act realizes the fact that the US currently lacks the capabilities to produce the most advanced chips at volume. Its billions of dollars in incentives are designed to fix that with companies like Qualcomm and GlobalFoundries already planning $4.2 billion in chip production in an upstate New York facility, says Reuters.