President Joe Biden recently signed the CHIPS and Science Act. The new legislation could revive the country’s manufacturing sector, create hundreds of thousands of sustainable jobs, strengthen the supply chains, and facilitate future economic growth.
The bill, together with the passage of the Inflation Reduction Act and a few other of Biden’s previous policies, have so far created 642,000 manufacturing jobs. The new construction of manufacturing facilities across the country has also increased by 116 percent over the past year.
In response to Biden’s signing of the Act, companies have collectively announced that they will be investing almost $50 billion in semiconductor manufacturing, improving the overall number to nearly $150 since he took office.
The country’s market share of memory production has been less than two percent, but that is expected to change over the next decade, with estimates expected to rise by 10 percent over the next decade.
In 1965, the United States invested 2 percent of its GDP in the research, development, and production of semiconductors. Two years ago, that number was less than 1 percent with employment opportunities concentrated in small pockets across the country.
The CHIPS and Science Act increases GDP investment back to 2 percent and will create employment opportunities in the fields of science and technology across the country.
Semiconductors are an integral part of everyday life. They are the technological foundation of anything from video game consoles to electric vehicles to advanced military equipment. Qualcomm, one of the leading semiconductor companies in the world, announced its plans to increase production by 50 percent over the next five years.
GlobalFounderies, a manufacturer for Qualcomm and a global supply leader of semiconductors, also announced that its manufacturing agreement with Qualcomm is more than doubling. The company has officially committed to expanding its manufacturing capacity at its most advanced semiconductor facility in upstate New York.
$52.7 billion is being allocated for other companies to also improve their research, innovation, manufacturing, and workforce expansion.
Certain tax incentives, such as a 25 percent investment credit for the manufacture of semiconductors and other technologies, will help secure the domestic supply. Doing so will lead to the creation of thousands of sustainable union and high-skilled manufacturing jobs.
Small businesses will benefit as they will receive funding to increase their workforce and community investments. Disadvantaged communities will also see new employment opportunities as the bill requires companies to invest their business expansion in those areas.
There are some heavy restrictions attached to the funding in the bill. Because the aim is to reduce reliance on supply chains and manufacturing from other countries, especially those in Southeast Asia, recipients are forbidden from opening certain facilities in China and other countries.
The practice of stock buybacks was at one time illegal in the United States because it was considered to be a form of market manipulation. That changed in 1982 under the Reagan administration when the SEC provided a legal pathway for stock buybacks.
Under the new bill, companies are prohibited from using the funding for stock buybacks and increasing shareholder dividends.