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One lesson learned from the COVID-19 pandemic is that decades of outsourcing and globalization has left the U.S. dependent on foreign manufacturing. Amid growing political tensions in 2022, the government allotted hundreds of billions of dollars to reduce the dependency on foreign manufacturing.
Congress passed two bills last year that provide funding for the deglobalization of innovative American technologies.
The shortage of semiconductors from supply chain disruptions during COVID forced the U.S. to take action and bring chip fabrication back. This act, which stands for Creating Helpful Incentives to Produce Semiconductors, directs $280 billion toward enhancing U.S. semiconductor operations, provides investments to regional innovation hubs and promotes workforce development in STEM fields.
Companies are investing billions of dollars to spur the development and manufacturing of the latest technology.
In October 2022, Micron Technology Inc. (Nasdaq: MU) announced it would invest $20 billion by the end of the decade, and up to $100 billion over the next 20 years, to build and grow a large fabrication plant in central New York. In February 2023, Texas Instruments Inc. (Nasdaq: TXN) announced plans to build the next 300-millimeter semiconductor wafer fabrication plant in Lehi, Utah, an investment of $11 billion. Intel Corp. (Nasdaq: INTC) six months ago broke ground on its $20 billion project for two semiconductor manufacturing plants in Ohio.
Among other identified outcomes, White House officials proport that the package will lower energy costs for families, accelerate private investment in clean energy solutions in every sector and strengthen supply chains from critical minerals to efficient electric appliances, according to CleanEnergy.gov.
The eligible applicants and programs funded are quite expansive. Both consumers and manufacturers are provided access to the funds.
As it relates to the consumer, among other items, the act allows for $9 billion in home energy rebates to electrify home appliances and make energy-efficient upgrades. Tax credits are available to help offset costs for installing solar panels and battery storage systems. Incentives are provided to make energy-efficient construction of multifamily and single-family homes more affordable.
Related to manufacturing, the funds are distributed by grants, tax credits and direct loan programs awarded to and distributed by various government agencies.
Many of the projects funded in the Inflation Reduction Act run on semiconductors funded by the CHIPS Act. Between private investment and the hundreds of billions in seed money from the government, American ingenuity and innovative technologies will be created and fabricated domestically. The global transition to clean energy and the reshoring of American chip manufacturing could be the beginning of this century’s renaissance in technology made in the U.S.A.
Andy Drennen is a certified financial planner and senior portfolio manager at Simmons Private Wealth in Springfield. He can be reached at firstname.lastname@example.org.
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