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The CHIPS and Science Act of 2022 and the Emerging Intellectual Property Landscape

Shane Hunter

Shane Hunter | Partner View more articles

Shane is a member of our Patent Practice Group

The United States, once the leader in both semiconductor innovation and manufacturing, is looking to regain its leadership position with the CHIPS and Science Act of 2022.

The CHIPS Act will not only provide incentives (~$50B for R&D and manufacturing) for US-based semiconductor activities, it will also spark a new era of innovation with the creation of the National Semiconductor Technology Center (NSTC) to support and accelerate U.S. leadership in semiconductor R&D, engineering, and advanced manufacturing technologies.

The pandemic revealed the fragility of global supply chains. As a result, semiconductors, microelectronics, and the digital devices/services they enable became a national security concern. The CHIPS Act provides funding to the U.S. Departments of Commerce and Defense so that they may promote the flood of domestic intellectual property (IP) generation needed to meet the many technical challenges facing advanced and sustainable U.S. semiconductor manufacturing throughout this decade and into the next. Congress has appropriated funding for the creation of the NSTC to integrate industrial, academic, and government R&D across the spectrum of the semiconductor ecosystem to reduce the time and costs of bringing new and vital technologies to market. These efforts will connect the people, tools, materials, resources, and facilities required to ensure the economic success and national security of the U.S.

The semiconductor industry is expected to grow past the $1 trillion milestone by 2030. This growth potential, coupled with the strategic importance of the technologies enabled by the semiconductor and microelectronics industries, will drive greater emphasis on IP generation, protection, and valuation. The management of a company’s IP portfolio should become more visible to management teams, boards, and investors. As a result, companies engaged in the semiconductor ecosystem will require highly specialized IP services to accomplish their strategic objectives.

The CHIPS Act will provide incentives for both U.S. corporations and multi-national corporations that manufacture in the U.S. Examples of these highly publicized semiconductor fabricators (“fabs”), include Intel in Ohio, Micron in New York, TSMC in Arizona, and Samsung in Texas. Less publicized, but strategically important for the U.S., are the incentives and programs being enacted to further support inventors, startups, and the R&D efforts of larger ecosystem players including capital process tool makers, advanced materials makers, and as well as inventors and startups. The NSTC will provide domestic access to advanced prototyping capabilities for R&D teams to explore new concepts and technologies and to accelerate their commercialization, further enhancing U.S. manufacturing capabilities for the most advanced semiconductor applications. These new technologies and, potentially, new companies, will require expert and comprehensive IP legal advice and services to maximize the value created by the overall growth of the semiconductor and microelectronics industries.

In April of this year, Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the USPTO, wrote “The USPTO is also helping to advance the Biden Administration’s commitment to unleashing America’s potential. Furthermore, the USPTO is crafting a strong IP protection framework that will support the achievement of the goals of the Inflation Reduction Act, the CHIPS and Science Act, and other key legislation that will create and invest in innovation hubs, shore up our supply chains, and revitalize American manufacturing. This work lays the foundation for efforts to help future generations succeed and thrive.”

The push for increased sovereign R&D and manufacturing provides new funding and motivation for more U.S.-based technology innovation whether companies can gain CHIPS Act incentives or not. Additionally, various geopolitical forces (e.g., China and Taiwan) are shaping the economics of the semiconductor industry, further highlighting the need for more innovation in the U.S. from industry/academia/government and the requirement for new IP strategies and services. To a large extent a nation’s power, influence, prosperity, and defense are now linked directly to the success of its semiconductor industry, ecosystem, and supply chain. America’s ability to control, manage, project, and properly value its intellectual property, will drive increasing levels of IP law support and services throughout the semiconductor and microelectronics ecosystem.

The commercial stakes and strategic importance of innovation in the semiconductor and microelectronics sectors will drive the need for increased and better IP legal services to support these innovators.

Please contact T.J. Clark or Shane Hunter with any questions you may have about the CHIPS Act and the impact it may have on your business.

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