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CHIPS Act of U.S.

  • The United States’ Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS Act).

  • The Act authorises $52.7 billion over five years to boost American competitiveness, innovation and national security in semiconductors.

Lessons for India from CHIPS Act of U.S

CHIPS Act of U.S. :

  • The Act involves cooperation and coordination between several arms of the government. 

  • Four separate funds have been created for the execution of the Act. 

  • The Department of Commerce is the lead agency administering the $50 billion CHIPS for America Fund for accelerating semiconductor manufacturing and research. 

  • But there are also allocations for the Department of Defense ($2 billion) for defence-unique technologies.

  • The Department of State ($0.5 billion) to coordinate with foreign partners on semiconductor supply chain security.

  • The National Science Foundation ($0.2 billion) to promote the growth of the semiconductor workforce. 

  • This structure highlights the priority accorded to semiconductors.

In India:

  • India’s semiconductor industrial policy is being managed mainly by the Ministry of Electronics and Information Technology (MeitY). 

  • The schemes for manufacturing, assembly, displays and compound semiconductors have been assigned to an independent division called India Semiconductor Mission (ISM) within a non-profit company set up by MeitY. 

  • The policy for chip design is being administered by C-DAC, an R&D organisation again under the MeitY. 

  • The ISM Committee comprises largely MeitY bureaucrats. 

  • While the committee is a good beginning, ensuring that the semiconductor strategy survives beyond government terms requires a whole-of-government approach along the lines of the CHIPS Act.

CHIPS Act of U.S. :

  • Companies seeking funding under the CHIPS Act are required to submit workforce development plans. 

  • A nodal agency, the National Semiconductor Technology Center (NSTC), has been created to collaborate with industry and educational institutions. 

In India:

  • This must become a focus area for India as well.

  • A competent semiconductor engineering workforce is India’s quickest route to gaining leverage in the semiconductor industry. 

  • Keeping this in mind, MeitY has begun a Chips2 Startup (C2S) programme, collaborating with over 100 universities and colleges. 

  • Like the NSTC, C2S aims to scale up workforce expansion by supporting existing quality training programmes

  • In the Indian case, however, many private training centres prepare chip designers outside the conventional university system.

  • Hence, it is important for C2S to focus on certifying good programmes of universities or private training institutes rather than running them.

CHIPS Act of U.S. :

  • The CHIPS Act has also created a CHIPS Program Office (CPO) to lay down the guidelines for assessing the financial viability of a project. 

  • The CPO is hiring Investment Principals and Financial Structuring Directors to catalyse private sector investments. 

In India:

  • While India also has guidelines for assessing the viability of proposals, a lot remains to be done concerning transparency. 

  • The government needs to put out regular monthly progress reports on its semiconductor programme. 

  • This will help manage expectations and instil reassurance in India’s plans.

CHIPS Act of U.S. :

  • The CHIPS Act is not just about bringing semiconductor manufacturing back to the U.S.

  • The Department of Commerce also invests $11 billion focused on future research. 

  • For example, the strategy acknowledges that advanced packaging is a leverage point to excel in semiconductors over the next decade. 

  • Hence, it envisages a National Advanced Packaging Manufacturing Program (NAPMP) to help the U.S. gain a disproportionate competitive advantage in the future. 

  • Packaging was considered a labour-intensive and low-margin component of the supply chain only a few years ago. 

  • However, as downscaling transistors becomes difficult, researchers have zoomed in on advanced packaging techniques that combine multiple semiconductors in a multi-dimensional arrangement on a single substrate, all in one package.

In India:

  • In India’s semiconductor strategy, advanced manufacturing and packaging research are not priority areas of focus. 

  • This makes sense to the extent that India is currently nowhere in the picture in high-volume chip manufacturing. 

  • However, the lesson from the CHIPS Act is that India’s strategy needs to identify and invest in research on future technologies.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: CHIPS Act of U.S. UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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