US CHIPS Act Fails To Achieve The Industrial Revolution Planned By The Biden Administration, 40% Investments Reportedly Delayed or Halted

The Biden administration's CHIPS Act initiative hasn't worked out quite as expected, as the Financial Times reports that 40% of large-scale investments are either halted or delayed indefinitely.

For those unaware, the CHIPS Act was introduced by the US Government in 2022 in an attempt to promote domestic semiconductor growth and attract giant industry players to set up facilities in the US. The scheme brought in $400 billion worth of incentives in the form of tax credits, loans, and grants, and in light of this, several firms were key to capitalize on the opportunity, with Intel and TSMC leading the race.

However, a report from the Financial Times has disclosed that approximately 40% of major manufacturing investments haven't reached to their conclusion yet, posing a big question about the policy.

It is disclosed that around $84 billion worth of investments have been delayed by over two months or have been halted, without any signs of continuation. Financial Times managed to track around 114 large projects worth $227.9 billion, which justifies the 40% mark we discussed earlier. This development cites a huge concern around the relevance of the CHIPS Act, or whether this incentive has managed to achieve its objectives. It has also raised questions on the policies of Biden administration, and whether the "domestic" narrative is turning out as pledged.

The reasons behind the delay are plenty, but according to the Financial Times, market conditions followed by political uncertainty are the primary cause, due to which companies have decided to revise their plans. With the US elections happening in November, government policies will certainly be inconsistent which has affected the progress of large-scale projects. One such example is TSMC's Arizona facility, which has been a victim of delay, whether due to policy concerns, or even the technology transfer process in general.

FT says that the largest projects on halt include Enel Group's $1 billion solar panel factory in Oklahoma and LG Energy Solution’s $2.3 billion facility in Arizona. Apart from this, mainstream semiconductor companies such as TSMC, Intel, and GlobalFoundries have faced roadblocks in their development process as well, hence it is safe to say that CHIPS Act hasn't managed to fulfill the "Made in US" narrative yet, although there is plenty of optimism around.