The CHIPS and Science Act is now three years old, and it’s already clear that the landmark law has failed spectacularly to live up to its promises.
Don’t get me wrong. It’s not because the CHIPS Act failed to incentivize manufacturers to build or expand semiconductor factories in the US. The law has succeeded wildly on that score. Spurred by concerns for supply chain resilience, national security, and global competitiveness, the Act sparked over $540 billion in US semiconductor production and supply chain investments. More than 100 new projects in 28 states are on track to create tens of thousands of new jobs, and US chip manufacturing capacity is set to triple over the next decade. As an example of using government funding to “crowd in” private sector investments, the CHIPS Act was a smash success.
Which is why, despite complaining about it in public, the Trump administration seems to be leaving the policy largely intact.
But the CHIPS Act has failed miserably to make chip manufacturing a high-road business you’d be proud to have in your neighborhood. The law’s grants, loans, and tax breaks were initially intended not only to bring back an industry that had left the US but to do it right.
In the 1970s, 80s, and 90s, semiconductor production jobs in Silicon Valley were poorly paid, with women and people of color in the lowest ranks. Workers handled toxic chemicals without adequate protection, and female technicians suffered high rates of miscarriage, stillbirth, and babies with birth defects. Employees who tried to assert their collective bargaining rights were routinely fired and blacklisted. Meanwhile, hazardous substances used in chip-making polluted the air, water, and ground. Today, there are more poisoned Superfund sites in Santa Clara County, the birthplace of the microchip, than any other county in the nation. When most chip production moved to Asia, these problems moved with it.
The Biden administration promised to employ the power of the public sector to change all that – creating good, safe, family-sustaining jobs for the workers who needed them the most, without endangering neighbors or natural resources. And here’s where the CHIPS Act has fallen short.
For example, look at those new manufacturing jobs. The law’s implementation doesn’t require companies to pay good wages or benefits, so they don’t. A manufacturing technician at Intel Arizona, for example, earns an average of $18 an hour. At nearby TSMC, a quarter of employees earn less than $14.70 an hour.
But if the wages are low, the price tag is high. Adding the CHIPS Act incentive grants (cash handouts from the Commerce Dept.) to the tax credits (cash handouts from the IRS), the legislation delivers over $150 billion in taxpayer dollars to some of the world’s richest companies, for a total of fewer than 64,000 permanent jobs – almost $2.5 million for each new job created.
And there’s no guarantee companies will actually create the jobs they promised. Intel promised to create 10,000 manufacturing jobs in exchange for the largest CHIPS Act grant awarded – almost $8 billion. Since signing the contract with the CHIPS Program office, however, the company has cut more than 8,000 US jobs.
Avoiding the mistakes of the past also means strengthening environmental protection. Chip-makers have a miserable record of exposing nearby communities to industrial poisons. In the last few years, Intel accidentally turned off its air pollution mitigation equipment, releasing caustic gases into an Oregon neighborhood for two months, while Samsung dumped 763,000 gallons of acidic waste into a Texas waterway, killing all aquatic life. Nothing in the CHIPS Act or its implementation requires companies to inform communities which chemicals they use or strengthen safety standards. So, again, they don’t.
Supporters assure us that our laws will keep us safe, but the laws are rapidly eroding. Last year, Congress exempted virtually all CHIPS Act recipients from environmental review. And just last week, President Trump directed the federal government to modify bedrock environmental laws like the Clean Air Act and the Clean Water Act in order to facilitate the construction of new semiconductor factories and data centers. His administration has cut funding for workplace safety and weakened the requirement that employers protect workers from known hazards.
The current president and his minions have continued to hand out CHIPS Act money, while holding that the Act was too “woke.” They boast about stripping away burdensome environmental regulations, unnecessary childcare requirements, expensive pro-union obligations, and of course an excess of diversity, equity, and inclusion. Sadly, from the standpoint of workers and local communities, the CHIPS Act was always a bonanza for some of the world’s largest corporations, with few strings attached. While Biden’s Commerce Dept. talked a good game about good jobs and safe production standards, they never embodied this rhetoric in enforceable commitments in CHIPS Act contracts.
The failure of the CHIPS Program Office to restore safe, equitable semiconductor production, under both Democratic and Republican leadership, explains the backlash we’re seeing today across the country. In Peoria, Arizona; West Lafayette, Indiana; and Mundy Township, Michigan, among others, neighbors are outraged, packing city council meetings and filing lawsuits as they learn what these huge new factories might do to their air and water and speak out to protect the safety of their children.
In the end, the tragedy of the CHIPS Act goes beyond the failure of a single law, no matter how expensive and consequential. Along with the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, the CHIPS Act was supposed to usher in a new economic paradigm – an alternative to the free-market, neoliberal approach that had for decades been enriching the rich and impoverishing the rest of us. The bill was the symbol of revitalized industrial policy – harnessing the power of government to build a more just and equitable economy.
In the end, however, the CHIPS Act turned out to be something more familiar: corporate welfare. Its guiding principle is neither inspiring nor just: hand out public money to private corporations and hope for the best. Though domestic chip production is booming, a larger opportunity has been squandered. Ultimately, only with the active participation of workers and communities can we achieve the original promise of large-scale public investment.
