Components > RF & Wireless Blog

CHIPS Act Helpful but Not a Panacea

by Chris Taylor | Mar 09, 2023

The U.S. CHIPS and Science Act, characterized by opponents as welfare for big companies that make their own chips such as Intel and Texas Instruments, passed into law in August of 2022.  Touted as the way to revitalize the U.S. semiconductor industry and restore U.S. self-reliance in chips, the bill addresses serious shortcomings, but it is a drop in the bucket compared to the investment needed to onshore the entire semiconductor supply chain.

The $280 billion legislation includes $52 billion for the semiconductor industry as well as additional subsidies for related research.  Proponents say the bill will improve national security and make the U.S. economy stronger against competition from China.  In particular, the bill will improve the supply of domestically fabricated semiconductors for defense electronics firms required to purchase from firms in the U.S.

The CHIPS act will appropriate funds through tax incentives and specific initiatives such as CHIPS for America, and CHIPS for Defense, which includes a defense lab-to-fab program called the Microelectronics Commons with “hubs” (universities) and “cores” (manufacturing centers) as partners.   Congress has to approve each appropriation separately, and each could face political opposition.

Smaller U.S. companies that produce semiconductors for RF and wireless applications can benefit, especially those supplying into defense electronics.  Some examples:

  • Akoustis Technologies, a producer of high power, high frequency RF acoustic filters, has invested $140 million in a fab in Canandaigua, NY.  The company’s first orders came from the defense sector, and the company is in a good position to benefit from the CHIPS Act in efforts to upgrade to 8-inch (200 mm) wafers.
  • Finwave Semiconductor, a fabless start-up developing GaN FinFETs for mmWave applications, will use domestic GaN foundries.  Finwave and its foundry partners will benefit from the act.
  • GlobalFoundries hopes to modernize its Essex Junction Vermont fabs with the help of the CHIPS Act.  GF is a leading foundry supplier for RF front end components used in consumer wireless devices, defense electronics, and cellular infrastructure.
  • Menlo Micro produces MEMS metal contact switches for T&M, A&D, and military applications.  The company has seven RF switch products in production for military radios and plans to expand into the market for industrial power switches by offering smaller MEMS-based replacements to large mechanical switches.Menlo Micro has domestic production facilities and pushed for the CHIPS Act for small tech companies and start-ups.

The bill mainly helps subsidize the fabrication of domestic semiconductors but does less to help the U.S. reduce its dependence on off-shore semiconductor back-end processing such as wafer dicing, packaging, assembly, and test.  Today about 80 percent of the roughly $500 billion of semiconductors produced globally every year use packaging, assembly, and test services located in Asia.

To address this, the CHIPS Act allocates $2.5 billion to the National Institute for Standards and Technology (NIST) to establish a National Advanced Packaging Manufacturing Program (NAPMP).  The goal is for NAPMP to help develop advanced packaging to extend Moore’s Law such as chiplets and 3D packaging.

The CHIPS Act will help bolster U.S. semiconductor self-reliance, but investment on the order of trillions of dollars over many years would be needed to on-shore the entire semiconductor supply chain.  This is not feasible and not necessarily desirable, as it could result in a subsidy race, severe labor dislocation,  and conflicts with allies.

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