The CHIPS Act Revolution: What It Means for U.S. Electronics Manufacturing in 2025
As a U.S.-based electronics manufacturer, the $52.7 billion CHIPS Act isn't just policy—it's a game-changer that's reshaping our industry. Here's what every engineer and hardware developer needs to know.
$39B in manufacturing incentives
25% tax credit for semiconductor investments
Expected supply chain improvements by 2026
New opportunities for U.S.-based hardware startups
What’s the Big Deal with the CHIPS Act?
If you work in electronics manufacturing or hardware development, you’ve probably felt the pain of chip shortages over the last few years. Whether it was waiting months for an MCU, dealing with skyrocketing prices, or scrambling to redesign a PCB around an alternative part, supply chain issues have been a headache for everyone.
That’s where the CHIPS and Science Act comes in. Passed in 2022, this $52.7 billion investment is the U.S. government’s attempt to bring semiconductor production back home, making the industry more resilient and less dependent on overseas fabs.
But what does this mean for engineers, startups, and manufacturers? Is this just another government initiative with no real impact, or will it actually change how we build electronics in the U.S.? Let’s break it down.
Why Was the CHIPS Act Even Necessary?
Back in the 1990s, the U.S. made nearly 40% of the world’s semiconductors. Fast forward to today, and that number has dropped to 12%—while countries like Taiwan, China, and South Korea have taken over the market.
This shift didn’t happen overnight. It was the result of:
Outsourcing for lower costs – Companies moved production offshore to stay competitive.
Massive government subsidies overseas – Taiwan and China heavily funded their semiconductor industries, while the U.S. didn’t.
Supply chain risks getting ignored – Until the pandemic, most companies didn’t think twice about where their chips came from.
Then COVID-19 hit, demand skyrocketed, and supply chains collapsed. Car companies halted production, electronics manufacturers scrambled for parts, and even defense contractors struggled to get the chips they needed.
The U.S. realized it had a major problem—so it decided to do something about it.
What’s in the CHIPS Act?
The CHIPS Act is basically a giant stimulus package for semiconductor manufacturing and research in the U.S. Here’s where the money is going:
1. $39 Billion in Manufacturing Incentives
Funding to build new semiconductor fabs in the U.S.
Grants and tax breaks for companies investing in domestic production.
Major chipmakers like Intel, TSMC, Samsung, and Micron are already planning new facilities in states like Arizona, Texas, and Ohio.
2. $13.2 Billion for Research & Development
Establishing the National Semiconductor Technology Center (NSTC) to push innovation.
Funding workforce training programs to grow the number of engineers and technicians in the semiconductor industry.
Investing in next-gen chip technologies like AI accelerators, RISC-V processors, and ultra-low-power semiconductors.
3. 25% Tax Credit for Semiconductor Investments
If a company spends money on chip manufacturing or equipment in the U.S., they get a 25% tax break—which could be a big deal for growing businesses.
4. $2 Billion for Defense & Critical Industries
Ensuring that military, aerospace, and high-tech industries have access to secure, U.S.-made chips.
How Will This Actually Impact Electronics Manufacturing?
More Chips, Fewer Supply Chain Nightmares
One of the biggest issues in electronics manufacturing has been long lead times for essential components. With more U.S. fabs coming online, we could see:
Shorter wait times for processors, microcontrollers, and FPGAs.
Fewer disruptions from international conflicts or trade restrictions.
More stable pricing over time, as local production increases supply.
Right now, we’re still a few years away from seeing the full effects, but the investment is a step in the right direction.
2. More Opportunities for Startups & Small Manufacturers
If you’re a startup working on AI chips, IoT devices, or custom hardware, this could be huge. The CHIPS Act includes funding for:
R&D grants to support new chip designs.
Partnerships with new U.S.-based fabs to get prototypes made faster.
Tax breaks that could lower production costs for small to mid-size hardware companies.
For years, many small hardware startups had no choice but to outsource manufacturing to China or Taiwan. With this new investment, it might finally make financial sense to keep production local.
3. More Onshore PCB Assembly & Electronics Manufacturing
Even though the CHIPS Act is focused on semiconductors, it will ripple across the entire electronics industry. As more chips are made in the U.S., we could see:
More domestic PCB manufacturing options.
Stronger local supply chains for parts and components.
More U.S.-based contract manufacturers expanding their capabilities.
This could be a game-changer for companies that want to proudly label their products “Made in the USA” without blowing their budgets.
4. More Jobs & Higher Demand for Engineers
With billions pouring into semiconductor manufacturing, companies will need more skilled workers to design, test, and build these chips.
Electrical engineers, embedded developers, and FPGA designers will be in high demand.
More apprenticeships and training programs will open up for engineers looking to get into the semiconductor space.
Long-term career growth in fields like AI chip design, high-performance computing, and custom ASIC development.
The Challenges & Unanswered Questions
Not everyone is convinced that the CHIPS Act is a silver bullet. Here are a few big concerns:
Fabs Take Years to Build – We won’t see real results until at least 2026 or later.
U.S. Labor Costs Are High – Even with incentives, U.S. production might still be more expensive than overseas manufacturing.
Global Competition Isn’t Slowing Down – China, Taiwan, and South Korea are still heavily investing in their own semiconductor industries.
While the CHIPS Act is a good first step, it’s only one part of the equation. U.S. companies will still need to stay competitive through innovation, efficiency, and smart supply chain strategies.
So, What’s Next?
The CHIPS Act won’t fix everything overnight, but it does mark a major shift in how the U.S. approaches semiconductor manufacturing. Here’s what to watch for:
More U.S.-based fabs coming online in the next 5-10 years.
PCB manufacturers and contract assemblers expanding their capabilities to support the industry.
More funding opportunities for startups working on next-gen chip designs.
Growing job opportunities for engineers in the semiconductor space.
For anyone in hardware development, embedded systems, or electronics manufacturing, this is the perfect time to:
Explore funding opportunities for R&D and prototyping.
Build relationships with U.S. semiconductor fabs for long-term supply chain stability.
Position your business to take advantage of “Made in the USA” incentives.
Final Thoughts
The CHIPS Act isn’t just a policy—it’s a game-changer for the future of electronics manufacturing in the U.S. While it has its challenges, it’s a big step toward making the supply chain more reliable, creating new opportunities for startups, and keeping innovation local.
What do you think? Will the CHIPS Act actually help the industry, or is it too little too late?