CHIPS Act may be 'durable' no matter who's in the White House

The Biden administration has invested nearly $34 billion in building out domestic semiconductor manufacturing sites in just two years since the CHIPS and Science Act was passed. With increased competition from China in this sector and the growing AI chip trade, former White House CHIPS Coordinator and Duke University professor of business and public policy Aaron "Ronnie" Chatterji joins Catalysts to discuss US growth.

Chatterji commends the government's efforts over the past two years, stating "the government's done a great job" in attracting investments from major players like Intel (INTC), Samsung (005930.KS), Micron (MU), SK Hynix (000660.KS), and Taiwan Semiconductor Manufacturing Company (TSM).

Chatterji, who also served as the acting deputy director of the White House National Economic Council from December 2022 to August 2023, highlights that the US is now the only region in the world hosting the top five logic and memory producers.

"We needed the CHIPS Act before the AI boom, and now with the AI boom we're gonna have a chance to participate in manufacturing some of those high-end chips here in the United States," Chatterji comments to Yahoo Finance, furthering the US position to capitalize on the growing global demand for semiconductors.

Ahead of the first presidential debate between 2024 candidates Vice President Kamala Harris and former President Donald Trump, Chatterji also weighs in on the "bipartisan consensus" the CHIPS Act was passed under, which he believes only strengthens the durability and longevity of the program no matter who is in the White House.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Angel Smith

Video transcript

Two years after the Chips Act passed, the Biden administration has invested roughly $34 billion in building out the US semiconductor manufacturing sites.

But China is moving quickly to ramp up their own capacity, importing more semiconductor equipment than any other country this year to discuss where things stand.

We want to bring in the architect of the Chips Act.

Ronnie Chatterjee.

It's great to have you back on the program here with us, a former White House chips coordinator and a Professor of Business and Public Policy at Duke University, Ronnie.

It's great to see you.

So, so I guess as we lead up to the of the debate tonight, looking ahead to November elections, I'm curious just to get your assessment on where things stand, given the money that's been deployed and given the future growth that we are expected to see from some of those larger names like Intel.

Well, it's great to be here.

I think two years on you have $30 billion over roughly 15 projects across many different states.

So the government has done a great job in terms of making the announcements, these preliminary memorandums of terms they've reached with all these different companies and they've done a good job of getting the major players in there.

That was a big question early on.

But you're seeing that now with Intel, with Samsung, with Mike from, with SK he and TS MC, we're the only geography in the world that has the top five advanced logic and memory producers all in the same place.

So that stuff's gone really, really well, I think what you gotta watch going forward is the cyclicality of the chip industry.

Something you talked about in the show before, how that affects the government strategy going forward.

I doubt it'll come up on the debate.

It's a little wonky but it's gonna be really important to watch over the next four years.

Yeah, we're gonna be talking about that for sure in a hot second here.

But when you think about the future cycles uh of chip purchases as well, I mean, you have companies like NVIDIA talking about million chip data centers, you had Oracle and their earnings yesterday talking about needing nuclear reactors to power data centers in the future as well and they're already breaking ground and ready to design one.

So what is that signal to you about?

Just the types of purchases at least a new baseline that we should expect for chips purchases from this point forward.

Well, I think the A I infra that which you're talking about is huge and you're seeing companies from the hypercars on down making massive investments in A I infrastructure and that includes data centers and GP US and as you know, the energy to power them, and we're still figuring out some of these deep technology problems in terms of how we're gonna power the data set we're gonna need in the future.

I see that really positive for the chips industry.

I mean, honestly we need the chips act before the A I boom and now with the A I boom, we're going to have a chance to participate in manufacturing some of those high end chips here in the United States.

So I see it as both a great tailwind for the industry but also a really important sort of goal for the US government to make sure that the US plays a role in manufacturing those chips.

And that's what I see happening in the future.

You know, there has been some reports and some covering just in terms of some of the uncertainties surrounding when the money is going to be delivered specifically here to Intel Intel, facing this unclear path here to some of the biggest awards from the subsidiary program.

I'm curious just to get your perspective on that and it may be what that would ultimately or the challenge that that then poses to Intel here at least in the near term.

Yeah, the good thing from the chips program perspective is it's a diversified bet you have Ts Mc Samsung and Intel, all at the leading edge, all who received PM TS these preliminary memorandums of terms to get the money, but the money hasn't come out yet.

And that allows the government to use milestones and traning to make sure that if you're not hitting those commercial or technical milestones, you don't get the money that you were supposed to get.

And I think that's really gonna be the key thing to watch going forward.

You know, Intel has a big board meeting coming up, September, they've still publicly committed to hitting their technological and product milestones.

That's gonna be a big story to watch.

And TS MC has reported they've reached some yields that are really close to what they get in Taiwan out of their Arizona fat and many people weren't expecting that.

So you're gonna see positive news, you're gonna see negative news in this kind of industry.

It's really important to have a lot of options.

And you see that with the US chip strategy, watch those projects in Texas in Arizona, in Ohio, in upstate New York, they're all gonna have ups and downs over the next 10 years, but at the end of the day, be producing more chips in the United States than we were before, particularly on the most advanced notes and then for the globalization and, and the partnership efforts on those chips.

I mean, do you think especially as we're looking forward to tonight's debate to see what business themes are discussed chips could be one of those to what extent do you think a de globalization effort on one side of the aisle versus maybe kind of securitizing some globalization?

Uh on the other side would impact chips specifically.

My view is that chips given it was passed with a bipartisan consensus is going to be really durable.

Why is that?

Because when it comes to microelectronics, we're thinking about national security and economic security and that's why so many folks rallied around it.

So I think, no matter, you know what the administration looks like in the next four years or after that, there'll be a strong by bars and for chips because it is a matter of national security that we produce some of these most advanced chips and some of the more mature chips that go into our defense and weapon systems.

And so I think chips is going to be just fine in terms of the political environment.

I think the big question is execution risk and that's something that we're gonna need to watch going forward.

I have confidence that they've done a good job up to this point, but we got to keep it up.