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CHIPS Act should benefit AZ’s large semiconductor industry

Posted at 6:20 PM, Aug 09, 2022
and last updated 2022-08-09 21:20:03-04

PHOENIX — One of Arizona’s leading industries may be getting a big boost today with the signing of the CHIPS act.

CHIPS is rare, a major piece of legislation that passed with bipartisan support, although Arizona’s senate and congressional delegation fell along party lines.

Its intended purpose is to spur growth in semiconductor manufacturing in the US.

According to the White House, the CHIPS Act is a $58 billion carrot for semiconductor manufacturers.

Most of the money, $39 billion, will go directly to manufacturing incentives.

Another $2 billion is allocated for legacy chips to help ease the microchip shortage in the automotive industry and for defense systems that rely on older chips.

The remaining funds will go to research and development and supply chain issues that have been plaguing the industry since the start of the COVID-19 pandemic.

Jared Bernstein, a member of Biden’s Council of Economic Advisors told ABC15 that the supply chain strain from the COVID-19 pandemic was a major driver for passing the legislation. “The U.S. produces only 10% of global microchips. That turned out to be an obvious and serious problem during the pandemic,” Bernstein said.

If the incentives work as intended, Arizona stands to gain a lot economically.

The state punches well above its weight class in semiconductor manufacturing.

According to a recent report from the Semiconductor Industry Association, the state ranks 4th in the nation for the number of foundries.

It is surpassed by California, Texas, and Florida. Three states with more than twice Arizona’s population. The same report pegged the semiconductors as Arizona’s highest export by value.

There are six major semiconductor companies with foundries in Arizona.

Intel is by far the largest and recently announced another $20 billion investment here.

The global leader, Taiwan Semiconductor Manufacturing Company, is planning to open a foundry in Phoenix in 2024. It will be the only location outside of Taiwan to produce the company’s five-nanometer chip, its most advanced product line.

Local economist Jim Rounds is optimistic about what the CHIPS act will do for Arizona.

He says it’s the right move at the right time. “This economic momentum we’re seeing that’s just getting started is going to continue and even expand,” Rounds said. “We could have a fantastic economic growth cycle after the next recession for the rest of the decade.”