Under the US Chips and Science Act, the US National Institute of Standards and Technology (NIST) revealed this week that it will be accelerating semiconductor research through a public-private network of technical centers.

The $52 Bn CHIPS and Science Act, authorizes a total of $280 Bn in discretionary spending to boost R&D for semiconductor productions. It was enacted by the US Congress and signed into law on August 9, 2022. The same day as the BIS (Bureau of Industry and Security, Commerce) released its federal register that banned multiple Chinese tech firms, mainly in telecommunications and Manufacturing. Huawai, for instance, a major Chinese manufacturer of phone switches and other equipment was alleged to have major military and intelligence ties to China. In addition, the US Government has indicated that the company violated US sanctions against Iran.

Up until now, much of the focus around the $52 billion CHIPS and Science Act has revolved around the $39 billion in subsidies and tax credits available to companies that planned to build fabs in the US. However, establishing a domestic semiconductor industry is only part of a broader Act that will see $11 billion directed to R&D under the direction of NIST.

The endeavor would involve the creation of two new research organizations: the National Semiconductor Technology Center (NSTC), which would focus on advancing chip tech, and the National Advanced Packaging Manufacturing Program (NAPMP), which, as its name would imply, will concentrate on packaging.

While, The US is betting on only the biggest hitters in the industry, many believe the public use of funds for this endeavor is still highly speculative. Not to mention, how much of of these funds will just be used for corporate stock buybacks?

Betting on AI chips in in the midst of so many changes in the technological landscape surrounding AI chips specifically seems pre-mature to many. Handing out subsidies today to the likes of Intel, TSMC or Samsung Electronics, doesn’t guarantee security in the AI landscape of the future.

Handing subsidies to only the biggest manufacturers and leaving out fabless manufacturers that handle the design of these technologies is short-sighted and it doesn’t necessarily bolster innovation.

Companies like AMD, for instance.

The fact of the matter is that, at this point, TSMC, for instance has yet to even see the $15 Bn worth of tax credits to incentivize the construction of a plant in Arizona. Construction that began in 2021, but is severely behind schedule. Compared to their Kumamoto, Japan project which was completed in just 20 months.

The main problem, however, is that US costs are exceedingly unmanageable, from labor to materials. A core issue that has been yet to be truly examined in the grand scope of American economics. TSMC is building elsewhere freely. While America’s own Intel is only fondly hoping to start competing domestically with TSMC. Intel’s plan is being referred to as the “five nodes in four years” plan. But these plants are being built in Arizona, New Mexico, Ohio and Oregon – not Japan, Taiwan or South Korea, where rivals have had so much success with speedy construction.

Intel is delaying the construction timeline for its $20 Bn chipmaking project in Ohio amid market challenges and the slow rollout of U.S. grant money, the Wall Street Journal reported last month.

“We remain fully committed to the project and are continuing to make progress on the construction of the factory and supporting facilities this year,” an Intel spokesperson stated, saying that the pace of Intel’s expansion in Ohio may depend on various conditions, and that typical construction timelines for semiconductor manufacturing facilities are 3-5 years from breaking ground.