The CHIPS Act's success came from a 'happy medium' design. Congress set a clear, bipartisan objective (semiconductors) but granted the executive team broad discretion on implementation. This structure proved more effective than an overly broad mandate (e.g., 'economic security') or overly prescriptive legislation.
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The first draft of the CHIPS Program Office's guiding "Vision for Success" paper was a historical analysis of how the U.S. lost its semiconductor manufacturing edge. This diagnostic approach was replaced with a forward-looking, target-setting document to be more practical and less academic for stakeholders.
While simple, tax credits are a passive tool. Discretionary funding grants, like those in the CHIPS Act, allow government agencies to actively negotiate for specific strategic outcomes, such as compelling a company to build an extra fab or onshore a critical technology that a tax credit alone would not incentivize.
To manage its broad legislative discretion, the CHIPS team proactively published a 'Vision for Success' document. This public commitment acted as both an internal disciplining mechanism for measuring progress and an external accountability framework, preventing mission creep and aligning stakeholders.
The CHIPS program office developed an internal "4Cs" framework to systematically evaluate funding applications. This model assessed projects based on manufacturing volume (Capacity), technological know-how (Capability), market dynamics (Competition), and importance to end-use markets (Criticality), ensuring consistent and fair decision-making.
It's a common error to conflate the CHIPS Act and the October 2022 chip controls. The CHIPS Act was a legislative effort for domestic manufacturing resilience. The executive export controls were a separate national security policy focused on denying China access to high-end compute for military applications.
Major shaping legislation on China, from the CHIPS Act to sanctions, often originates in Congress. Congressional action creates durable policy that outlasts fleeting presidential administrations, providing guardrails and tools for the executive branch.
The 2022 CHIPS Act was passed months before ChatGPT's launch. The subsequent AI-driven demand for semiconductors was not the primary driver for the legislation. The Act's incentives accelerated US manufacturing capacity, luckily positioning the nation to capitalize on an unanticipated boom.
A complete national industrial strategy requires a dual approach. It needs large, congressionally-approved programs for trillion-dollar sectors like semiconductors, paired with a smaller, more flexible fund to quickly address emerging choke points in smaller markets like rare earths or APIs without new legislation each time.
The CHIPS team's primary goal was securing a commitment for three TSMC fabs, viewing it as a strategic tipping point. They believed the operational scale of a three-fab cluster would make building a fourth, fifth, and sixth a near certainty, creating a self-sustaining 'mega fab' without requiring subsidies for later expansions.
High-achievers from the private sector are drawn to government service by missions with tangible impact and the resources to execute. The CHIPS program's success in recruiting was tied directly to its significant funding and clear mandate, which is far more compelling than a purely analytical or advisory role.