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Policy 6 min read Published Updated Credibility 92/100

Policy Briefing — U.S. CHIPS and Science Act Enacted

The CHIPS and Science Act of 2022 authorizes $52.7B for U.S. semiconductor manufacturing and R&D plus tens of billions for AI and emerging technology programs, imposing guardrails, reporting, and supply-chain accountability for recipients.

Zeph Tech Research Lead

Research lead, Zeph Tech

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Executive briefing: President Biden signed the CHIPS and Science Act (Public Law 117-167) on 9 August 2022, unlocking $52.7 billion in direct incentives for semiconductor manufacturing and R&D alongside more than $170 billion in authorisations for science agencies to accelerate artificial intelligence (AI), quantum, advanced communications, and clean energy innovation.1 The statute establishes the CHIPS for America Fund to provide $39 billion in manufacturing incentives, $11 billion for R&D programs such as the National Semiconductor Technology Center (NSTC) and National Advanced Packaging Manufacturing Program, plus a 25 percent advanced manufacturing investment tax credit.1 It also directs the National Science Foundation (NSF), Department of Energy (DOE), and National Institute of Standards and Technology (NIST) to expand AI research institutes, regional technology hubs, and workforce pipelines, while imposing guardrails that restrict recipients from expanding certain semiconductor operations in China and other “countries of concern.”2

The CHIPS and Science Act aims to strengthen domestic semiconductor supply chains, reduce dependence on foreign fabrication, and drive breakthroughs in AI and other critical technologies. Applicants for funding must submit detailed business plans, supply-chain risk management strategies, workforce development commitments, and assurances around labour standards, environmental compliance, and cybersecurity.3 Companies receiving more than $150 million must share a portion of excess profits, maintain child care plans for facility workers, and agree to restrictions on stock buybacks.3 Agencies administering R&D and workforce programs – such as NSF’s Regional Innovation Engines and AI Research Institutes – will require participants to meet data-sharing, cybersecurity, and reporting obligations that align with federal grant requirements.

Funding programs and governance

The CHIPS for America Fund comprises several components: (1) manufacturing incentives administered by the Department of Commerce for front-end fabrication, assembly, testing, and packaging; (2) R&D programs including the NSTC, National Advanced Packaging Manufacturing Program, and Manufacturing USA institutes; and (3) $2 billion for legacy chip production critical to automotive and defence sectors.1 Commerce’s implementation strategy, released in September 2022, outlines evaluation criteria such as economic impact, commercial viability, financial strength, and ability to meet guardrail conditions.3 Applicants must submit security and resilience plans covering supply-chain mapping, critical supplier diversification, inventory management, and contingency strategies for disruptions.

The Act authorises the creation of up to 20 regional technology and innovation hubs through the Economic Development Administration, emphasising coordination with state and local governments to build clusters around AI, quantum computing, biotech, and clean energy.2 NSF receives $20 billion in authorised funding for a new Directorate for Technology, Innovation, and Partnerships (TIP), tasked with scaling AI research institutes, workforce programmes, and translational research to accelerate commercialization.2 DOE is directed to expand national lab user facilities and partner with industry on microelectronics R&D, while NIST must develop metrology standards, cybersecurity guidelines, and workforce education initiatives that support the semiconductor ecosystem.

Guardrails and compliance obligations

Section 103 of the Act imposes guardrails that prohibit recipients of CHIPS incentives from engaging in “significant transactions” that materially expand semiconductor manufacturing capacity in foreign countries of concern for ten years.1 Commerce’s March 2023 proposed rule clarifies that covered transactions include new or expanded facilities producing advanced logic, memory, or packaging nodes beyond specified thresholds.3 Recipients must notify Commerce of planned overseas investments, maintain detailed records, and face clawbacks if they violate guardrail provisions. Additional restrictions prevent recipients from engaging in joint research or technology licensing with covered foreign entities that could undermine U.S. national security.

Funding agreements will include reporting obligations on project milestones, capital expenditures, workforce metrics, and environmental performance. Commerce may require audited financial statements, cybersecurity attestations aligned with NIST standards, and evidence of compliance with domestic content requirements for construction materials. Recipients must also certify that they are not owned or controlled by foreign entities of concern and disclose beneficial ownership structures.3 Violations can result in repayment, interest penalties, or exclusion from future funding rounds.

AI and emerging technology programmes

The science title of the Act authorises substantial investments in AI research. NSF’s TIP Directorate is empowered to expand AI Research Institutes, focusing on areas such as trustworthy AI, climate modelling, advanced manufacturing, and human-AI collaboration.2 The Act also establishes a National Artificial Intelligence Research Resource (NAIRR) task force to design shared computing infrastructure and datasets for researchers, building on recommendations from the National Security Commission on AI.4 DOE receives direction to advance exascale computing, AI-driven scientific discovery, and partnerships with industry to translate R&D into commercial applications.

To manage these programmes, agencies must implement rigorous project selection, data governance, and cybersecurity controls. NSF and DOE grantees must comply with federal grant rules (2 CFR 200), including financial management, performance reporting, and audit readiness. AI research projects should incorporate ethical review, bias mitigation, and data privacy safeguards, particularly when using sensitive datasets. Participants should expect requirements for open science practices, reproducibility, and technology transfer plans that align with Bayh-Dole obligations.

Workforce development and inclusion

The Act emphasises workforce development through scholarships, apprenticeships, and regional partnerships. NSF’s STEM Education programs receive authorisations to expand experiential learning in AI, microelectronics, and advanced manufacturing.2 Commerce’s strategy requires CHIPS applicants to submit workforce development plans covering training, partnerships with educational institutions, and pathways for underrepresented communities. Companies must also provide access to affordable child care for facility workers as a condition of receiving large awards, integrating social infrastructure into compliance monitoring.3

Stakeholder engagement with labour unions, community colleges, and workforce boards is critical to meeting these expectations. Metrics should track recruitment, retention, diversity, and certification outcomes. Applicants should align workforce investments with existing Department of Labor programmes, apprenticeship standards, and state economic development initiatives to leverage co-funding and ensure sustainability.

Supply-chain risk management and cybersecurity

Recipients must demonstrate robust supply-chain risk management, including diversification of critical materials (e.g., photoresists, gases, wafers), supplier qualification, inventory strategies, and contingency plans for geopolitical disruptions.3 Cybersecurity programmes should align with NIST SP 800-171/172 for protecting controlled unclassified information, incorporate zero-trust architecture principles, and ensure incident response capabilities meet federal expectations. Facilities should integrate physical security, insider threat mitigation, and export control compliance to protect sensitive technology.

Environmental, social, and governance (ESG) considerations also feature prominently. Applicants must address environmental permitting, water usage, waste management, and community impacts, demonstrating alignment with state and federal environmental regulations.3 Continuous monitoring of energy consumption and emissions can support sustainability commitments and respond to stakeholder scrutiny.

Action items for enterprises

  • Readiness assessments: Conduct gap analyses against Commerce’s CHIPS funding criteria, including financial controls, guardrail compliance, workforce commitments, and reporting systems.
  • Program governance: Establish cross-functional steering committees covering finance, legal, supply chain, engineering, cybersecurity, and government affairs to oversee application development and award management.
  • Data infrastructure: Implement project management information systems capable of tracking milestones, expenditures, workforce metrics, and compliance artifacts for audits.
  • Policy monitoring: Track rulemakings from Commerce, Treasury (investment tax credit guidance), NSF, and DOE to update compliance playbooks and adjust contractual terms with partners.
  • Partner due diligence: Vet joint venture partners, suppliers, and research collaborators for foreign ownership or control risks that could jeopardise guardrail compliance.

Sources

Zeph Tech guides semiconductor and AI leaders through CHIPS Act funding governance, guardrail compliance, and technology risk management.

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