The CHIPs Act Slacks on Domestic Production Targets

Congress recently passed the CHIPs and Science Act, legislation that includes $52 billion worth of tax credits for companies to build semiconductor fabrication facilities (“fabs”) in the United States. This is an important step, since the U.S. is currently too dependent on computer chips manufactured in Asia. The CHIPs Act could certainly lead to more fabs being built in the United States. But a smart approach is needed—and could serve as a model for the reshoring of other important industries. At present, shortages of semiconductors are a major problem. Each year, the U.S. consumes billions of dollars-worth of electronic products that contain vast amounts of semiconductors. However, the U.S. only manufactures a small and shrinking share of global chip output.