• Navigator
  • Industry Analytics and Strategy
  • National
  • Manufacturing

Where the CHIPS Act is Transforming the US Semiconductor Ecosystem

October 3, 2023 Tom Dworetsky, AICP

Where the CHIPS Act is Transforming the US Semiconductor EcosystemThe semiconductor industry has taken center stage in the economic development world as regions compete to attract billions in investment.

Among other factors, chip shortages and supply chain challenges exacerbated by the pandemic and rising geopolitical tensions between the US and China have made the onshoring of chipmaking a policy priority for the US. The nation currently produces only 12% of the global supply, compared to 37% in 1990, and is a net importer of chips.

In May 2020, Taiwan Semiconductor Manufacturing Company (TSMC) announced its plans to build a $12 billion semiconductor fab in Phoenix, AZ. Shortly thereafter, the CHIPS and Science Act was introduced, marking the beginning of a wave of semiconductor manufacturing facility investment announcements throughout the US.

Enacted in August 2022, the CHIPS and Science Act provides $52.7 billion in federal funding for semiconductor research, development, and manufacturing. This includes $39 billion for semiconductor fabrication incentives, $13.2 billion in R&D and workforce development, and $500 million to strengthen global supply chains.

Where is the Money Going?

We are already seeing some clear patterns in the states and regions that are attracting semiconductor investment in the wake of the CHIPS Act. According to data from the Semiconductor Industry Association, private investment in semiconductor supply chain manufacturing has been announced in 22 states since 2020, topping $210 billion in planned investments and 44,000 in anticipated jobs.

Top companies by total announced investment include Texas Instruments, Intel, TSMC, Micron, and Samsung Electronics. Top states include Arizona ($61.7 billion), Texas ($61.1 billion), New York ($21.5 billion), Ohio ($20.1 billion), Idaho ($15 billion), and Utah ($11 billion).

Arizona has the highest number of announced projects by far with 14, which are all concentrated in the Phoenix area. Rounding out the top three are Texas with six projects and New York with five projects.

On the research and development side, the CHIPS for America Defense Fund allocated $2 billion to the Department of Defense to establish and operate a “Microelectronics Commons,” a national network for onshore, university-based prototyping, lab-to-fab transition of semiconductor technologies, and semiconductor workforce training.

The mission of the Microelectronics Commons is to create a “direct pathway to reduce the country’s reliance on foreign microelectronics and safeguard the nation from supply chain risks.” Six technology areas critical to the Department of Defense’s mission were selected as focus areas for the network. Each Hub will be focused on one or more of these areas:

  • Secure Edge/Internet of Things (IoT) computing
  • 5G/6G
  • Artificial Intelligence (AI) hardware
  • Quantum technology
  • Electromagnetic warfare
  • Commercial leap ahead technologies

Economic Development Navigator: Get timely, well-researched, and insightful articles about all things economic development delivered directly to your inbox each month. Subscribe now.

New Regional Innovation Hubs Funded

In the largest award to date under the CHIPS Act, $238 million in Fiscal Year 2023 funding was awarded to eight regional innovation hubs (out of 80+ submissions). There are two hubs in the Northeast, two in the Midwest, two in California, one in Arizona, and one in North Carolina.

These hubs will be responsible for working with member organizations to develop the physical, digital, and workforce infrastructure needed to support microelectronics R&D especially as related to defense applications.


1. Massachusetts: Northeast Microelectronics Coalition (NEMC) Hub

Awardee (Hub Lead): The Massachusetts Technology Collaborative (MassTech)
FY23 Award: $19.7 million
90 hub members

2. Indiana: Silicon Crossroads Microelectronics Commons (SCMC) Hub

Awardee (Hub Lead): The Applied Research Institute (ARI)
FY23 Award: $32.9 million
130 hub members

3. California Defense Ready Electronics and Microdevices Superhub (California DREAMS) Hub

Awardee (Hub Lead): The University of Southern California (USC)
FY23 Award: $26.9 million
16 hub members

4. North Carolina: Commercial Leap Ahead for Wide Bandgap Semiconductors (CLAWS) Hub

Awardee (Hub Lead): North Carolina State University (NCSU)
FY23 Award: $39.4 million
7 hub members

5. Arizona: Southwest Advanced Prototyping (SWAP) Hub

Awardee (Hub Lead): Arizona Board of Regents on behalf of Arizona State University
FY23 Award: $39.8 million
27 hub members

6. Ohio: Midwest Microelectronics Consortium (MMEC) Hub

Awardee (Hub Lead): MMEC
FY23 Award: $24.3 million
65 hub members

7. New York: Northeast Regional Defense Technology Hub (NORDTECH)

Awardee (Hub Lead): The Research Foundation for the State University of New York (SUNY)
FY23 Award: $40 million
51 hub members

8. California-Pacific-Northwest AI Hardware Hub (Northwest-AI Hub)

Awardee (Hub Lead): The Board of Trustees of the Leland Stanford Junior University
FY23 Award: $15.3 million
44 hub members


There is a fair amount of geographical overlap between these regional innovation hubs and planned investments in manufacturing facilities, with some notable exceptions. Arizona (#1 in total investment announcements) is perhaps an unsurprising choice for an R&D hub. In the Midwest, both Ohio (#4) and Indiana (#12) have a strong showing in project announcements.

In the Northeast, however, while New York has secured a number of manufacturing projects (#3), Massachusetts (along with all other New England states) has none.

All facility announcements in California (#7) are clustered in the greater Bay Area/Sacramento region, aligning with the selection of Stanford University as a hub. Despite no project announcements in Southern California, the University of Southern California (USC) has been selected as the other California hub.

Lastly, North Carolina State University (NCSU) is the lead awardee for the North Carolina hub. NCSU is located not far from Siler City, where a new 445-acre manufacturing campus has been announced, though the Southeast as a whole accounts for relatively few new projects.

It remains to be seen the extent to which these new regional innovation hubs shape future semiconductor investment in their respective regions. The presence of R&D partners is one factor among many that semiconductor manufacturers weigh in their site selection decisions. Existing concentrations of talent and suppliers, along with site and infrastructure availability factor heavily into the equation.

> View an interactive map of the US semiconductor ecosystem from the Semiconductor Industry Association.

Moreover, at least 12 states have enacted state-level semiconductor incentive programs in the wake of the federal CHIPS Act, which will also play into future siting decisions. The top five states in total manufacturing investment announcements since 2020 all have state incentive programs. Four of the states chosen as Microelectronics Commons hubs also have state semiconductor incentives (Arizona, California, New York, and Ohio).

The Department of Commerce is currently reviewing over 460 applications for domestic semiconductor manufacturing projects, including investments in manufacturing facilities, semiconductor materials, and manufacturing equipment.

Two additional funding opportunities for material and equipment facilities and R&D facilities will be announced later this year. Stay tuned for new funding awards and project announcements in the coming months.

Is your community positioned to attract semiconductor investment? Camoin Associates can help assess how you stack up to competitors across locational factors such as workforce availability, proximity to suppliers and markets, innovation ecosystem, sites and infrastructure, and more using custom geographic competitiveness analysis. Our industry and workforce development strategists can help identify specific opportunities within the semiconductor industry and craft strategies to attract private investment. Learn more about our services and get started.


Related Navigator Article:

Video: What are Semiconductors (Source: Semiconductor Industry Association)