Decoding CHIPS Act: How Arizona Stands to Benefit from Legislation

By Leira Aquino

Mar 18, 2024 11:17 PM EDT

US President Joe Biden (L) tours the TSMC Semiconductor Manufacturing Facility in Phoenix, Arizona, on December 6, 2022. Arizona's strategic position in the semiconductor industry, along with the recent influx of CHIPS Act funding, is set to strengthen its standing as a key player in the field.
(Photo : BRENDAN SMIALOWSKI/AFP via Getty Images)

Arizona, already burgeoning with semiconductor industry investments, stands to gain substantially from the CHIPS Act, a bipartisan legislation aimed at revitalizing US manufacturing. 

The Arizona Commerce Authority (ACA) reports that since January 2020, approximately 35 semiconductor industry suppliers have either expanded or relocated to Arizona, underscoring the state's appeal as a tech hub.

Arizona's Semiconductor Sector Sees Early Gains from CHIPS Act

The impact of the CHIPS Act has already begun to be felt in Arizona. Notably, the US Department of Defense awarded a significant portion of the initial CHIPS Act funding to an Arizona State University-led consortium comprising over 70 partners, securing around $40 million. 

Moreover, the recent announcement of a $13.8 million cooperative agreement awarded to ASU by the US Department of State's Bureau of Economic and Business Affairs further underscores the state's growing importance in the semiconductor landscape.

The CHIPS Act, short for Creating Helpful Incentives to Produce Semiconductors Act, was signed into law on August 9, 2022 by President Joe Biden. The law allocates $52.7 billion to bolster various facets of the semiconductor industry. 

A substantial portion, $39 billion, is earmarked for manufacturing incentives, with a focus on both cutting-edge and mature technologies. This includes provisions to support semiconductor manufacturing essential for automotive and defense applications.

Furthermore, the legislation allocates $13.2 billion towards research and workforce development initiatives.

The CHIPS Act seeks to stimulate investments in domestic semiconductor manufacturing capabilities. 

It initiates and funds various programs to  enhance semiconductor production and workforce development in the United States, including incentivizing domestic production, supporting research and development, ensuring international technology security, and promoting workforce education through the National Science Foundation.

The legislation provides grants, cooperative agreements, loans, and additional incentives, such as a 25% tax credit for investments in semiconductor manufacturing capital, according to azcentral.

Additionally, the CHIPS Act includes measures to address international information communications technology security and semiconductor supply chain activities, reinforcing the legislation's broader national security objectives.

Last month, Commerce Secretary Gina Raimondo emphasized the Biden administration's objective to establish the United States as a significant producer of advanced semiconductor chips before 2030. 

This effort is geared towards enhancing competitiveness in the global market, strengthening national security, and fostering job creation.

READ NEXT: India Approves $15.2 Billion Investment in Semiconductor Plants, Including Tata Group's Chipmaking Facility

Arizona Poised to Cement Status as Semiconductor Powerhouse

Arizona's strategic positioning within the semiconductor landscape, coupled with the influx of CHIPS Act funding, is expected to further solidify its status as a prominent player in the industry. 

The considerable investments made by semiconductor giants such as Intel and Taiwan Semiconductor Manufacturing Company in Arizona-based operations highlight the state's potential to establish itself as a pivotal semiconductor hub at a national level.

The CHIPS Act is not only set to bolster Arizona's semiconductor manufacturing capabilities but also to catalyze regional economic growth and development. 

By fostering collaborative partnerships between various stakeholders, including state and local governments, educational institutions, and businesses, the legislation aims to create vibrant technology and innovation ecosystems across the country.

Moreover, the legislation prioritizes equitable economic growth, ensuring that semiconductor incentives benefit a diverse array of communities and businesses. 

Provisions within the legislation mandate significant investments in workforce development, particularly targeting underserved and disadvantaged communities, thereby promoting inclusive economic prosperity.

As Arizona draws in more semiconductor investments and strengthens its reputation as a tech hub, the CHIPS Act stands as a significant opportunity for the state to capitalize on its strengths and contribute to revitalizing manufacturing and innovation in the US.

READ MORE: Biden Administration Unveils $11 Billion Semiconductor R&D Initiative to Create More Jobs for Americans

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