CHIPS Act will bring down costs for thousands of consumer

On Thursday, the House passed a bipartisan bill to help the U.S. compete against China, namely by steering billions toward domestic semiconductor manufacturing. The CHIPS and Science Act (which stands for, Creating Helpful Incentives to Produce Semiconductors for America) features over $52 billion for American firms making computer chips, and billions to go toward scientific research. The bill passed the Senate on Wednesday, meaning it now heads to President Joe Biden’s desk to be signed into law.

To hear more about the legislation, Fast Company spoke with Arizona Senator Mark Kelly, one of the key negotiators behind the Senate version. The conversation has been edited for length and clartity.

We’ve been watching the progress of this bill and it now looks like it’s very close to the finish line.

It’s really good news for the country. This is going to help bring down costs of tens of thousands of consumer products. I’d say at the top of the list for people is cars; even the cost of used cars has gone up because of the shortage of semiconductor chips.

Production lines have stopped in some cases because they can’t get chips. So this will have a very positive impact on how individuals manage their personal finances, but also this is a really big deal for our national security.

We cannot allow China to become a leader in the manufacturing of semiconductor chips. We used to make the best chips in the world. We made the first one. This stuff was invented here, and we used to have about 40% of the worldwide production. We’re now at 12%. And it’s getting worse.

What do you think about the idea that, even with this funding, it’s still going to take years to get up to speed on manufacturing the most complex for AI and things like that?

The companies that will benefit from this legislation have got a history of building quality semiconductor chips. They’re going to build fabs [semiconductor fabrication plants] here in the United States. They’ve got one under construction right now in Arizona, and they’re going to build more. They make the best chips in the world. So, they’re well positioned right here; but also in this legislation is the whole ecosystem. It’s the ability to design the best microchips in the world. So, there’s this funding intended to help organizations and universities and companies design the best microchips.

We’re covering the whole universe of microchip manufacturing. Arizona will become a hub in the United States. Other states will attract semiconductor manufacturing—I would say Texas, Ohio, New York. This is going to benefit the nation’s economy, and it’s going to help us be secure as a nation.

China has a very ambitious plan to manufacture better microchips. They make a lot of what we would call legacy chips, you know, the thing that goes in your washing machine. But they recently manufactured a 10-nanometer microchip, so they took a leap of a couple generations. They often learn how to do this by stealing the intellectual property of other companies in other countries, including in the United States. They have a habit of doing this, and they’ve got a plan to be a leader in the manufacturing of semiconductors.

Well, now we have a plan. Our plan is going to attract companies. Companies want to be here. They don’t want to be in China. But this legislation is going to help them make a decision to build these fabrication facilities here.

We’ve heard that China’s form of government gives them a great ability to exert influence over their commercial companies so that their defense always has what it needs. Is there anything in this bill that would ensure that the DoD can get the sophisticated chips that they need?

The DoD buys a lot of chips from TSMC [a Taiwanese multinational semiconductor manufacturing company] and other manufacturers. They don’t buy a lot from China. Some chips that DoD uses get routed through China to be tested. And we don’t have any capacity in the United States to test semiconductor chips. This legislation is going to fix that as well. So DoD will be able to get what they need. I was talking to the head of Raytheon the other day, and a Javelin [missile], as an example, has 250 microchips. DoD needs to have a ready supply, and it shouldn’t be a supply that has to come across an ocean.

These supply chains that go across the Pacific Ocean for stuff that we need for our national security, this is a big problem. If the Chinese invaded Taiwan, and we didn’t have access to semiconductor chips from Taiwan, the estimate is that, in a year or two, we would lose 10% of our GDP because we wouldn’t have access to semiconductor chips. You can’t make a phone. You can’t make fighter airplanes. You can’t make satellites, washing machines, vacuum cleaners, just basically anything that has any electronics in it.

We’ve been working on this legislation for a year. I never looked at this thing as optional. Some people think this is optional. This is not optional. This is, our national security is at stake when we’re talking about having access to the best chips in the world.

We know that the CHIPS bill sets up a series of Innovation Hubs across the country. What’s the central goal there? Is it to develop new kinds of chip technology?

The circuits are getting so small that to continue Moore’s Law, doubling the speed every year, that gets challenging. The 5-nanometer chip in an iPhone, has, in a square centimeter, about 2 1/2 billion circuits. Two and a half billion! On something that’s the size of your fingernail. It’s getting technically more challenging, so we need this partnership with government, universities, and industry to create the science and come up with the engineering to continue to move the microelectronics forward at the same rate we’ve been, since Intel first started manufacturing microchips.

If we’re able to continue to push this technology forward, we’re going to be, you know, this is what’s going to enable things like artificial intelligence and quantum computing and quantum communication networks to be what we would like them to be.

To what extent do you think those Innovation Hubs might help distribute more tech jobs to places other than the coasts?

Arizona is clearly not a coast. Arizona is going to become a hub for semiconductor manufacturing, but also for the design of chips, as well as the ecosystem that’s required to educate people to work in these high-paying jobs. So, I think it will spread more technology out into other areas of the country.

When and if the President signs this, are we going to start hearing announcements from chipmakers about, you know, plans for new facilities? How are we going to start seeing the effects of the bill if it’s passed?

I think one of the first things you’ll see is Intel will probably reset the date for their groundbreaking in Ohio. A couple weeks ago, because this was going so slow, and they were starting to get concerned, they delayed the groundbreaking of a fab facility in Ohio.

They’re planning to build some there. They’re planning on building two more in Arizona. Companies are making decisions about where to build facilities today. So you’ll see announcements I think next week, but some of this has already started. TSMC, as an example, is about 50% done with their first fab in Arizona. But it was built in anticipation of the United States of America doing something about this issue. They wanted to be in our country. So this legislation is the difference between them building one facility and possibly many more.