Why It Matters
A recent Congressional Research Service (CRS) report examines the implementation of the CHIPS Act and its progress toward revitalizing domestic semiconductor manufacturing. The law appropriated $50 billion to the CHIPS for America Fund, with $39 billion directed specifically to an incentives program supporting companies to build or expand commercial semiconductor fabrication facilities. By January 2025, the U.S. Department of Commerce had distributed $30.7 billion in awards and $5.5 billion in loans across 40 projects involving 19 semiconductor companies, while 12 additional companies signed preliminary agreements pending final due diligence.
The stakes are substantial for both Congress and the administration. The CHIPS Act aimed to increase domestic chip manufacturing capacity, address supply chain vulnerabilities, and improve competitiveness in the semiconductor and technology industries. Some Members of Congress pursued the legislation to enhance national security by ensuring domestic production of chips used in weapons systems. The initiative responds to a dramatic erosion of American manufacturing dominance: the U.S. share of global chip fabrication capacity fell from approximately 37 percent in 1990 to around 10 percent in 2022, while economies in East Asia, including Taiwan and South Korea, captured significant shares of new fab capacity.
The Big Picture
The implementation landscape presents multiple obstacles. Some companies attributed project delays to concerns about insufficient skilled workers capable of building and equipping commercial semiconductor fabs. Challenges relating to mitigation planning for the potential environmental effects of the construction and operation of award-funded fabs may have contributed to schedule changes. Intel provided the U.S. government with its equity in exchange for a direct funding award. As of July 2026, other award recipients have not publicly announced changes to their total capital expenditure or awards.
A critical pressure point emerges from dual timelines. In March 2025, President Trump stated his intention to renegotiate award agreements with funding recipients. Separately, fiscal year 2026 marks the final year for which the Department of Commerce is to receive CHIPS Act funding for incentivizing domestic semiconductor production. Additionally, a 35 percent investment tax credit for capital expenses related to semiconductor production and manufacturing equipment is available only to projects that begin fab construction before December 31, 2026.
The Bottom Line
Fiscal year 2026 is the final year for which the U.S. Department of Commerce is to receive CHIPS Act funding for incentivizing the domestic production of semiconductors. The 35 percent investment tax credit for capital expenses associated with the production of semiconductors and equipment for manufacturing semiconductors is available only to projects that begin fab construction before December 31, 2026. In March 2025, President Trump stated his intention to renegotiate award agreements with funding recipients, creating additional uncertainty around the program's trajectory during this critical final funding year.
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