This Is What President Biden's CHIPS Office Actually Did

Episode Summary

Executive Summary: The episode critiques how the U.S. has “forgotten” the 2022-23 semiconductor buildout and explores the CHIPS Act through the lens of former CHIPS Program Office director Hassan Khan. Khan argues the program was designed to rebuild a atrophied industrial base, balance leading-edge and legacy-node investments, and reduce policy uncertainty so private capital would keep building U.S. fabs despite higher costs and regulatory friction.

Main Topics: The forgotten reality of U.S. reindustrialization (Priority: 5/5): The hosts argue that public debate acts as if U.S. manufacturing revival is new, ignoring the large wave of factory announcements and construction already underway during 2022-2023 under the Biden administration. What the CHIPS Program Office actually did (Priority: 5/5): Khan explains his role in setting strategy, evaluating projects for economic security, and making deal-by-deal funding decisions across the semiconductor supply chain. Balancing leading-edge vs. legacy-node investment (Priority: 5/5): The conversation focuses on trade-offs in allocating CHIPS funding to expensive frontier fabs versus smaller but critical legacy-node, RF, power, and packaging capacity. The role of stakeholder friction (Priority: 4/5): Khan addresses criticisms about ‘everything bagel’ policy terms, arguing that community, labor, and environmental requirements were often not deal stoppers, but leadership had to prioritize getting factories built. Industrial policy vs. market incentives (Priority: 5/5): The discussion frames semiconductor manufacturing as a case where private incentives underinvest in U.S. fab capacity, requiring public support like tax credits and grants to align private returns with public value. What the CHIPS Act accomplished and what comes next (Priority: 4/5): Khan highlights announced investment, early production, and ecosystem maturation, while warning that policy uncertainty under the Trump administration could slow future projects.

Key Arguments: U.S. semiconductor reindustrialization was already underway in 2022-2023, so current rhetoric often erases recent progress and misrepresents the CHIPS Act as a new impulse. The CHIPS Program Office aimed to improve economic security by reducing dependence on offshore chip supply chains that were exposed during the pandemic and are also important for national security. Funding decisions were intentionally portfolio-based: the office prioritized leading-edge fabs but also reserved support for legacy nodes and adjacent supply-chain bottlenecks. Criticisms that social or community requirements materially delayed CHIPS projects are overstated; many of those provisions were statutory, already promised by firms, or relatively small in dollar terms. The biggest bottleneck in U.S. semiconductor manufacturing is not just money but lost institutional muscle: regulators, contractors, and suppliers had gone a decade without building leading-edge fabs. Private capital underinvests in U.S. manufacturing because returns are lower than in pure design businesses; tax credits and public support help equalize the economics. Policy certainty is crucial because semiconductor fabs are huge, long-duration investments that can become stranded if rules change mid-project. The CHIPS Act’s real success should be judged by whether the initial fabs trigger a broader ecosystem of suppliers, materials firms, and skilled labor over time.

Data Points: CHIPS Act passage date: August 2022 - Khan said the bill was passed in August 2022 and the office then had to begin implementation. ChatGPT release: November 2022 - Khan used this as a marker for how the public conversation shifted from shortages to AI supremacy. CHIPS program leading-edge funding target: about $28 billion - Khan said the office aimed to direct the vast majority of funding to leading-edge fabs. Micron/Intel/TSMC/Samsung combined awards: nearly $28-29 billion - Khan referenced large awards to major frontier semiconductor firms. Statutory legacy-node investment minimum: at least $2 billion - He noted Congress required a minimum investment in legacy-node chips. Childcare spending across CHIPS funding: about $10 million - Khan said childcare was a very small share of the $39 billion total. Total CHIPS funding referenced: $39 billion - Khan described the program budget when discussing childcare and grants. Total announced investment: $450 billion - He said this was the top-line figure used by the Biden administration to describe announced manufacturing investment. Electronics construction spending: more in 2023 and 2024 than the prior two decades combined - Khan cited Census data as evidence of a manufacturing construction boom. Last leading-edge fab completed in the U.S. before TSMC Arizona: 2013 - Khan used this to argue the U.S. had stopped building at scale for about a decade. First EUV machine installed in the U.S.: 2006 - He cited SUNY Albany as the site of the first U.S. EUV installation. High-volume U.S. EUV manufacturing arrival: December 2024 - Khan said TSMC brought EUV manufacturing to U.S. scale only recently. CHIPS pre-app response type: non-binding - He described the pre-application feedback process as advisory rather than mandatory. First full applications received: late summer / early fall 2023 - Khan gave the rough timing for initial full applications. First preliminary announcement: end of 2023 - He said BAE was among the first preliminary announcements.

Pivotal Quotes: "I really do feel like we forgot about what was accomplished, and honestly, less than two years." — Hassan Khan: Khan opening the interview, arguing recent semiconductor progress has been erased from public memory. "We basically stopped going to the gym." — Hassan Khan: He used this metaphor to describe how U.S. industrial capacity and regulatory know-how atrophied after a decade without building leading-edge fabs. "The best time to build a factory was 20 years ago. The second best time to build a factory is today." — Tracy Alloway: Closing reflection on the long-term costs of underbuilding U.S. industrial capacity.

Implications: The episode suggests U.S. manufacturing revival will depend less on rhetoric than on stable incentives, streamlined execution, and sustained policy. If uncertainty or partisan rollback continues, firms may pause investment; if support persists, CHIPS-style ecosystem rebuilding could spread beyond semiconductors.