President Joe Biden, who was still recovering from a rebound COVID case, extolled the virtues of the CHIPS and Science Act of 2022 during a virtual event in Michigan, where Gov. Gretchen Whitmer signed an Executive Order to implement the law in that state. “We’re back in the game,” Biden said. “There’s not a thing we can’t do. Remember. We invented these chips. We modernized these chips. We made them work. And there’s a lot more we can get done.”
The bill, which provides $52 billion in manufacturing grants to boost domestic semiconductor production, passed the Senate 64-33 and the House 243-187. Biden, who was reportedly waiting to be clear from COVID to have an in-person signing ceremony, signed the act into law Aug. 9, according to NPR.
“America invented the semiconductor. But over the years, we’ve let manufacturing of these semiconductors … get over overseas,” the president added. “And as we saw during the pandemic, when the factories overseas that make these chips shut down, the global economy comes at a screeching halt, driving up costs for families in a big way.”
And the combination of the supply chain strain during the pandemic and the uncertainty in relations between China and Taiwan, where more than 90% of advance chips are made, added to the urgency to get this legislation passed. It also comes at a time when inflation and supply chains are on everybody’s minds.
New Jersey lawmakers were at the center of the push to help get this bill over the finish line.
Sen. Bob Menendez said he is thrilled with the legislation that bolsters our domestic semiconductor industry through grants, tax credits and other incentives.
“This legislation will help bring online new chip-making plants in the U.S. and strengthen computer and electronic product manufacturers in New Jersey—which is crucial to our economic future and national security,” Menendez, a Democrat, told NJBIZ. “These investments in science and research will create good-paying jobs and will give us a more competitive advantage around the globe.”
“The semiconductor shortage over the past two years has played a critical role in surging inflation, as production of everything from cars to electronics has declined significantly, leading to higher prices for items we use every day,” said U.S. Rep. Mikie Sherrill, D-11th District. “This legislation will boost domestic manufacturing of microchips to ensure we address this shortage and reduce prices and will also boost the competitiveness of our advanced industries and R&D sector relative to China and other foreign nations.”
The pandemic wreaked havoc on the production of semiconductors and microchips globally. Semiconductors are an essential component of most electronic devices.
“The effects of this shortage have rippled through various industries in the United States, including automobile and home appliance manufacturing,” said U.S. Sen. Cory Booker, a Democrat.
Other notable toplines of the bill include providing five-year grants for domestic semiconductor manufacturing and research as well as 5G wireless deployment; enacting a 25% tax credit for investments in semiconductor manufacturing facilities; funding a five-year reauthorization of the National Science Foundation, Commerce Department and National Institutes of Technology to expand investments in research and development; and investing in science, technology, engineering and mathematics (STEM) education to train the future workforce.
Some in the Garden State are particularly pleased by a provision in the bill creating a National Supply Chain Database, which was championed by Menendez in collaboration with the New Jersey Manufacturing Extension Program (NJMEP).
“Of all of the benefits included in the CHIPS and Science Act, there is one I’m especially proud to have fought for: my bipartisan, bicameral Manufacturing Extension Partnership or MEP Supply Chain Database Act,” said Menendez. “Once enacted, this database will help the government and manufacturers prevent future supply chain disruptions.”
“The world view on manufacturing and supply chain has changed drastically over the past several years, and certainly has applied more pressure on U.S. manufacturing to step up and compete. The federal government’s Manufacturing Extension Partnership has certainly done its part, and NJMEP has helped lead the way,” said John Kennedy, CEO of the New Jersey Manufacturing Extension Program. “However, without further support from Sen. Menendez and his foresight and perseverance to create and maintain a National Supply Chain Database Tool, we’d be severely handicapped by our lack of depth in our knowledge of ‘what we produce and where do we do so.’”
The legislation sets aside $131 million for the National Supply Chain Database, which is aimed at preventing future supply disruptions by offering manufacturers key information as they make decisions on how to retool in critical areas to meet the demand for products, such as defense supplies, food, medical devices and more.
“It will generate benefits for consumers and families, for the manufacturing industry, and most of all, for our national economy as a whole,” said Menendez.
“NJMEP, we have a database of 9,000 companies and it’s a pretty good database, but it doesn’t go deep enough,” Kennedy told NJBIZ. “Worse, it doesn’t communicate with other MEP centers around the country. So, we literally, during COVID, had to do physical printouts and physical searches.”
Kennedy said the system was inefficient during a moment of a crisis, which is not a good thing for anybody. That’s why this database has the potential to be a game-changer.
“It’s real important because you can’t fix your supply chain until you know what’s in it,” said Kennedy. “And that’s part of the problem. We don’t know.”
The initiative is one that Kennedy and Menendez have worked together on for several years.
A popular move
The CHIPS Act is being well-received by the business community, especially in New Jersey, because of the potential for economic growth. “The shortage of semiconductors represents a significant challenge to thousands of businesses across New Jersey,” said Ray Zardetto, senior vice president of communications for the New Jersey Chamber of Commerce. “But this shortage also presents an opportunity for our state to again become a leader in this vital industry. New Jersey has a long and rich history of innovation, and it has always been characterized by visionary leadership and smart investments. The CHIPS legislation embodies both.”
Michele Siekerka, New Jersey Business & Industry Association president and CEO, said her organization supports the bill and its incentives to spur growth in domestic computer chip manufacturing. “The increased production of these chips that power and bring innovation to all modern electronics and automobiles, will help ease supply chain challenges and reduce reliance on foreign manufacturers,” Siekerka said. “Here in New Jersey, where we have a storied and historic role in manufacturing, we are primed to play a key role in this much-needed growth [and] innovation expansion.”
The additional funding for the Manufacturing Extension Partnership will help small- and mid-size New Jersey manufacturers train workers, adopt new technologies, and strengthen their own supply chains.
“If you don’t have the components. If you don’t have the supply chain, you can’t build it,” said Kennedy. He added that in order to protect ourselves in the future it is vital to reinvest in the industry.
“It’s a positive bill. I’m not a big fan of pumping money into things. But if we don’t invest intelligently in our infrastructure, and manufacturing is a key infrastructure, we’re screwed,” said Kennedy.
Biden has also emphasized that the bill is not a blank check to companies, saying it has guardrails to protect taxpayer dollars and the interests of the American workers, small businesses and communities. “It means companies partnering with community colleges, and technical schools that offer training and apprenticeship programs, and working with small- and minority-owned businesses,” said Biden.
Kennedy pointed out that his industry is high-tech, clean and offers great career potential, but it has not always gotten a lot of attention as it has evolved over the last 30 years.
“And some of this stuff is now bringing attention to it,” Kennedy explained. “It’s a great career industry where you can make a very good living and grow yourself as an individual and have, what we call, the American dream.”
He said the New Jersey manufacturing industry must seize this opportunity to go after additional funds and try to grow companies and attract and retain talent here in the Garden State.
“Look, made in the U.S. is a great thing. But I’m pretty biased. Made in New Jersey is a pretty awesome thing, too,” said Kennedy.
Kennedy believes if this legislation is used properly, it can be a home run, as long as the stakeholders stay the course to make it all work. I think we’re all learning from one another and moving the ball in the right direction,” said Kennedy. “Industry and government don’t always communicate well. And in order to move forward, we need more of that. And I think that some of this stuff is showing that we are.”
And he does believe that the CHIPS Act will produce benefits for New Jersey. “We’re in the perfect place, right?” Kennedy asked. “We’re within 24 hours of about 100 million people. New Jersey’s right in the middle of everything. We’ve got the smartest, most capable people. And yes, I’m biased. But we have a lot of talent here and a lot of great companies. Let’s help them drive New Jersey and the country.”
Editor’s note: This story was updated at 5:20 p.m. ET Aug. 9 to note that President Biden signed the bill into law.