What is the CHIPS ACT? How does it relate to New Albany project?

What is the CHIPS Act and it's relation to New Albany Project? 

 The CHIPS and Science Act (often referred to simply as the CHIPS Act) is a bipartisan U.S. federal law signed by President Joe Biden on August 9, 2022. It aims to strengthen America's semiconductor industry by reducing dependence on foreign manufacturing—particularly from Taiwan and China—amid concerns over supply chain vulnerabilities, national security, and economic competition. The act authorizes approximately $280 billion in new funding over a decade to boost domestic research, development, and production of semiconductors, which are critical components in everything from smartphones and cars to military equipment and AI systems. Key provisions include: - 

Manufacturing Incentives: About $39 billion in direct subsidies and up to $75 billion in loans or loan guarantees to encourage companies to build or expand semiconductor fabrication plants ("fabs") in the U.S. This also includes a 25% investment tax credit for qualifying projects. - Research and Development (R&D): Around $200 billion allocated to scientific research, including support for the National Science Foundation (NSF), Department of Energy, and other agencies to advance technologies in areas like AI, quantum computing, and advanced materials. - 

Workforce and Regional Development: Funding for STEM education, workforce training, and the creation of regional tech hubs to build a more inclusive talent pipeline and foster innovation ecosystems. - 

Restrictions Recipients of funding are prohibited from expanding advanced semiconductor manufacturing in China or other countries deemed national security risks for 10 years. The act was motivated by global chip shortages during the COVID-19 pandemic, geopolitical tensions (e.g., potential conflicts involving Taiwan, home to major producer TSMC), and the U.S.'s declining share of global semiconductor production (down to about 12% from 37% in 1990). By early 2024, it had already spurred over $200 billion in private investments and announcements for new fabs across states like Arizona, Texas, and Ohio. 

However, implementation has faced challenges, including delays in funding disbursement and debates over labor and environmental requirements. The CHIPS Act in Regard to New Albany, Ohio New Albany, a suburb of Columbus in central Ohio, has become a focal point for the CHIPS Act's impact due to a massive investment by Intel Corporation in semiconductor manufacturing. In January 2022—shortly before the CHIPS Act's passage—Intel announced plans to invest at least $20 billion (later expanded to $28 billion) in building two advanced chip fabs on a 1,000-acre site in New Albany, dubbing the area the "Silicon Heartland." The project was explicitly tied to incentives from the CHIPS Act, which helped sway Intel's decision to choose Ohio over other locations. 

 

Under the act, Intel's New Albany project (known as "Ohio One") has received significant federal support: - In November 2024, the U.S. Department of Commerce awarded Intel up to $7.865 billion in total direct CHIPS funding across its U.S. projects, with $1.5 billion specifically allocated to the Ohio facilities. This is part of a broader package that could reach $8.5 billion when including tax credits and other incentives. - The funding supports construction, equipment, and operations for producing leading-edge chips (e.g., sub-2 nanometer processes) for applications in AI, computing, and defense. - Ohio state incentives, including tax breaks and infrastructure investments, complement the federal funds, totaling over $2 billion from the state. 

 The project is expected to create substantial economic benefits for New Albany and the surrounding region: - Jobs: Up to 3,000 direct high-tech jobs at Intel, plus 10,000 construction jobs and tens of thousands of indirect roles in supply chains, logistics, and services. - Regional Transformation: It's positioning central Ohio as a emerging tech hub, attracting suppliers, research partnerships with universities like Ohio State, and related industries. Local leaders have invested in infrastructure, such as roads, utilities, and housing, to support growth. - Long-Term Impact: The fabs could help diversify Ohio's economy beyond traditional manufacturing and agriculture, with projections of billions in annual economic output.

 However, challenges and delays have emerged: - Construction, which began in late 2022, has been postponed multiple times due to slower-than-expected CHIPS funding releases, market conditions (e.g., softening demand for PCs), and negotiations over grant terms. As of early 2025, full production is now projected for 2030-2031, pushed back from an initial 2025 target. - Political uncertainties: In March 2025, President-elect Donald Trump called for repealing the CHIPS Act, criticizing it as inefficient, which raised concerns about potential funding cuts or cancellations for projects like New Albany. Intel has warned that without full CHIPS support, further delays or scaling back could occur. - 

Community debates:

 While the project promises growth, there are local discussions about environmental impacts, water usage for chip production, and whether state agreements with Intel include sufficient accountability measures. Overall, the CHIPS Act has been instrumental in bringing Intel to New Albany, potentially reshaping the area's economy, but its success depends on navigating ongoing delays and policy shifts. As of July 2025, construction continues, with the first fabs expected to ramp up in the coming years.