The CHIPS Act, and Its Importance

The CHIPS Act, and Its Importance
by Claire Henniges

Last month the CHIPS and science act was passed into law, which focuses on federal aid to increase microchip production in the United States. This is after nearly a two year long microchip shortage, which increased prices and decreased availability of electronic devices, which many consumers are still on backorder for. If the act is applied successfully, it would make the United States far more competitive with overseas chip capabilities. Which would strengthen supply chains and make them far more accessible. However, is appropriating over two-hundred billion dollars into microchip production and research really worth it for the average citizen?

Semiconductor chips, or microchips, are an integrated electric circuit with transistor, capacitor, and resistor components. All of the circuit components are wired on a semiconductor wafer, which is often made of silicon, a highly conductive material. A simple chip, usually no larger than a thumb nail, can contain as many as 3,000 transistors, which acts as an electrical switch to turn the current on and off. This allows for electrical current to be translated into usable instructions for the device. These chips are often misinterpreted as unimportant outside of a laptop CPU, but they are actually a powerhouse component of many modern comforts.

There are the obvious but not to be overlooked examples of microchips used in cell phones, laptops, and other personal electronics. However, it is not to be forgotten the myriad of other comforts designed with microchips: washing machines, AC units, and an abundance of kitchen appliances. Make sure to appreciate the almighty microchip next time you use an instant pot or microwave. Also keep in mind other overlooked parts of modern life, such as, ATMs, trains, advanced medical care, and the stop lights that annoy everyone to no end. As well, modern vehicles which usually contain over a thousand microchips. They are integral to our everyday life which is why during this two year long shortage, it has affected consumers on many levels.

The shortage started in the second quarter of 2020 amidst covid-19 lockdown. Aside from the long term supply chain issue, the pandemic caused an interesting shift in the need for microchips. The need for microchips could have dropped drastically during the pandemic, as car companies halted production. This would have been a massive hit to the chip market, as the car produced today easily contains over a thousand microchips each, even more for an electric vehicle. However this gap was filled, if not overfilled, by the sudden need for the technological ability to work at home. Personal electronics took over the consumer’s need for chips in a way it hadn’t before. However, towards the end of 2020, when automotive markets were picking back up, there simply weren’t enough to go around. A problem only inflated by the rise in popularity and demand for electric vehicles.

The current state of the chips shortage persists going into its second year, and likely will not be resolved anytime soon. As predicted there is better supply-demand balance as of right now, with less consumers on never ending backorders. Although that does not mean all available chips are the right type to fit all demands, displayed by Volkswagen’s comment, cited in Power & Beyond, that “there will likely be a structural shortfall in semiconductors up to and including 2023.” Even longer estimates have been made throughout the microchip shortage conversation, however, we are beginning to see a light at the end of a tunnel. That sadly does not mean the market will return to normal within these estimates, as the effects will likely span for the next couple years to come. However the bipartisan CHIPS act seems to be a step in the right direction. The importance of microchips is clear and an increase in production and research will be integral to preventing long-term supply chain problems that we are currently experiencing. A successful integration would make these little powerhouses far more accessible, as we continue to rely on them more and more.

References: science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/–updates-in-september-a-c19d05 657e0c470c0b336436737aa495/

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