Biden signs order to implement $52.7bn chips law

US President Joe Biden has signed an executive order to kickstart the implementation of the $52.7bn (£44.5bn) semiconductor chips manufacturing subsidy and research law, the White House said.

Earlier this month, Biden signed the bipartisan bill to boost efforts to make the United States more competitive with China's science and technology efforts. The 'Chips and Science' law also includes an investment tax credit for chip plants estimated to be worth $24bn (£20bn).

Commerce secretary Gina Raimondo said the department has been preparing for months for the programme, including the launch of CHIPS.gov, which will oversee funding awards for the production of silicon semiconductors. 

"We are committed to a process that is transparent and fair," Raimondo said. "This programme is intended to be an investment in America's long-term economic and national security and we will take the necessary steps to ensure its success."

Biden's order sets six primary priorities to guide the implementation of the Chips and Science law and establishes a 16-member interagency CHIPS implementation council that will include the secretaries of Defense, State, Commerce, Treasury, Labor and Energy. The council will be co-chaired by Deese, national security adviser Jake Sullivan and Alondra Nelson, the acting director of the White House Office of Science and Technology Policy.

The White House did not specify how much funding for semiconductor production will be provided, or how long it would take. Instead, it said the chips programme "will include rigorous review of applications along with robust compliance and accountability requirements to ensure taxpayer funds are protected and spent wisely."

The executive order "demonstrates that we are quickly executing on the President's vision for a 21st-century American industrial strategy," said Brian Deese, director of the National Economic Council, in a statement. "The Chips Act will secure critical supply chains for American manufacturers and shore up vulnerabilities to lower costs for families and strengthen our national and economic security."

Over the past two years, the chip shortage has forced Ford, Jaguar Land Rover, Volkswagen, General Motors, Nissan, Daimler, BMW, Renault and Toyota to shut factories, scale back production or exclude high-end features such as integrated satellite navigation systems, which rely on sophisticated semiconductor technology.

Since the shortage began in 2020, the economic losses caused by the lack of semiconductors can be measured in billions of dollars.

Earlier this year, Raimondo warned that the global semiconductor crisis is expected to last through 2023 and perhaps longer as manufacturing still struggles to keep up with demand. The Chips Act presented by the Biden administration has thus been interpreted as a direct response to the shortage. 

The proposed legislation has been praised, not only in terms of economic growth and the trade war with China, but also within the framework of national security. Senate majority leader Chuck Schumer called it “one of the most consequential bipartisan achievements of this Congress”.