The CHIPS Act – Not a tasty snack, but a way to promote US manufacturing

The “Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022” (aka “CHIPS”) was signed into law in August 2022. CHIPS will invest $280 billion (yes, that is a “b”) to bolster the semiconductor industry, helping to promote US research and development (R&D), build regional high-tech regional hubs and help create a bigger, more inclusive science, technology, engineering and math (STEM) workforce. It all sounds very “science-technology”, but CHIPS will provide another US-focused boost to the manufacturing sector.

At one point (decades ago) the US was the leader in semiconductor technology both in innovation and production, but we lost our head start. This new legislation will boost competitiveness and modernization as well as help with national security. The goal is to help promote R&D (quantum computing, AI, clean energy, nanotechnology, etc.) as well as move these innovations into the general economy, monitoring for many industries and professions – including manufacturing and related industries.

How will it help manufacturing?

There are numerous benefits to manufacturing. For starters, new major manufacturing investments are being made on US soil to produce specific technologies:

• Micron is investing $40B in memory chip manufacturing (powering computers and electronic devices), creating up to 40,000 new jobs in construction and manufacturing. Over the next 10 years, this massive investment immediately increases US production of memory chips from less than two percent to ten percent alone!
• A Qualcomm and GlobalFoundries partnership will invest $4.2B in existing US manufacturing facilities – this increases US “fabless semiconductor” production by as much as 50% over next five years.

This is just the start. More US-based and global technology companies will increase production, creating the need for well-paying, technology-oriented operations careers here in the US.

Indirectly, the CHIPS act will also create a boost for industries beyond semiconductors. Any manufacturer that uses microchips or semiconductor technology (and who doesn’t?) will benefit. For example, domestic availability will increase and while reducing reliance on distance supply-chain sourcing. The ongoing semiconductor shortage crippled many manufacturing industries and the pandemic highlighted the need for change. Thankfully, this act will help. The legislation will also aid with continued competitiveness in global markets. Less reliance on foreign relationships for key technology is welcomed.

Between the Made In America, Infrastructure, Inflation Reduction, CHIPS and other legislation, manufacturing in the US is on a major upswing – a welcome change of the decline of the previous three to four decades.

Are we ready for all this manufacturing?

Some of us are, and many are not. Challenging labor markets, supply chain woes, higher costs to manufacture and other factors make it hard for US-based organizations to remain competitive in the marketplace. Fortunately, there are numerous tools that make it easier to alleviate these headwinds.

Combinations of Industry 4.0 technologies such as IoT, AI/ML, 3D printing, and others will be a major factor. Cloud-based software – including tools like Brightly Asset Essentials solution tools in both CMMS and EAM sectors, offering major assistance. “Doing more with less” (money, people and time) is crucial. Operating “lean” requires a commitment to these technologies – it keeps our margins in check by reducing costs and retaining profitability. 

This technology makes our organizations stronger and more resilient to outside factors – inflation, pandemics, global turbulence and others. It’s like having a healthy body: everything is easier.

Conclusion

US manufacturing is going through a wonderful renaissance right now – the largest in my lifetime, and likely since the beginning of the second industrial revolution (mass production). Old paradigms are hard to shift. Many organizations that do not embrace these new times will falter. While upstart, forward thinking companies that embrace the technology will leapfrog the competition. Technology is a huge part of this renaissance – more affordable and easier than ever to use. Yes, the CHIPS Act is a technology focused investment in US Manufacturing, but it has the potential to be much more – another sign of a US-based manufacturing renaissance.

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