Short answer: A preliminary Peterson Institute for International Economics (PIIE) review says CHIPS Act support is likely to expand U.S. semiconductor production and improve supply resilience, but questions whether every company needed grants or subsidized loans on top of the 25% investment tax credit. For 10 of the 20 firms it assessed, the report says cash subsidies might have been essential; it estimates that up to $7.1 billion in grants and loans to financially strong companies might instead have been unnecessary. Those are judgments about what might have happened without support, not proof that the money was wasted.
What the PIIE review examined
In a January 17, 2025 article, EE Times summarized PIIE’s preliminary report, Industrial Policy Through the CHIPS and Science Act. The report evaluates Division A of the 2022 CHIPS and Science Act: federal grants, concessional loans and a 25% investment tax credit for semiconductor construction. PIIE puts the overall subsidy budget, including the associated investment tax credits, at nearly $200 billion.
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The review asks whether the program’s support will change where chips are made, strengthen economic and national security, reduce reliance on imported semiconductors, help the United States reach a 20% share of the world’s leading-edge chip production by 2030, and create jobs. Its central distinction is between increasing domestic production and choosing the most effective way to pay for it. More U.S. capacity can reduce the risk of shortages, the report says, but producing more chips does not automatically deliver the greatest security benefit for each public dollar.
Were CHIPS Act subsidies necessary?
PIIE’s answer depends on the recipient and the form of support. The report treats the 25% investment tax credit as broadly important to the projects it examined, but says the credit alone might not have been enough. It concludes that the credit was “a necessary but not sufficient condition” for projects selected by the CHIPS Program Office.
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That distinction matters: a project might need some federal incentive to proceed in the United States without needing every grant or loan it received. PIIE says grants or concessional loans were more plausibly essential where a project involved unique leading-edge technology, advanced assembly, test and packaging (ATP), weaker company finances, or a strategic need to build domestic capacity. It questions extra cash support where a company was financially strong, a domestic supplier could provide mature or legacy chips, or the investment might have gone ahead with the tax credit alone.
For 10 firms that PIIE considered financially strong, grants plus the subsidy value of concessional loans total $31.4 billion, while the firms are projected to receive $68.6 billion in investment tax-credit subsidies. The report says up to $7.1 billion of grants and loans to 10 financially strong companies might have been unnecessary. These are estimates of what the report believes could have happened under a different policy, not a finding that those companies failed to build projects or meet obligations.
How PIIE judged the 20 projects
The following classifications are the report’s judgments as summarized by EE Times, not independent causal proof. External evaluators did not have detailed CHIPS Program Office spreadsheets. Award amounts appear only where the summary states them; amounts not stated there are identified as such.
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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →| PIIE judgment | Company or project | Amount stated in EE Times summary |
|---|---|---|
| Probably not essential | BAE Systems Electronic Systems | Not stated in EE Times summary |
| Probably not essential | Microchip Technology | $162 million |
| Close call; listed among probably not essential | GlobalFoundries | Not stated in EE Times summary |
| Probably not essential | Polar Semiconductor | $123 million |
| Probably not essential | Absolics | $75 million |
| Probably not essential | Rocket Lab | $23.9 million |
| Probably not essential | Rogue Valley Microdevices | $6.7 million |
| Probably not essential | Amkor Technology | $400 million |
| Tax credit critical; grant or loan might not have been | Texas Instruments | $1.6 billion |
| Probably not essential | Edwards Vacuum | $18 million |
| Probably or possibly essential | Intel | Not stated in EE Times summary |
| Probably or possibly essential | TSMC | Not stated in EE Times summary |
| Probably or possibly essential | Samsung | Not stated in EE Times summary |
| Probably or possibly essential | Micron | Not stated in EE Times summary |
| Probably or possibly essential | Entegris | $75 million |
| Probably or possibly essential | GlobalWafers | $400 million |
| Close call; listed among probably or possibly essential | SK Hynix | $450 million |
| Probably or possibly essential | HP | $50 million |
| Probably or possibly essential | Wolfspeed | $750 million |
| Probably or possibly essential | Infinera | $93 million |
The table should not be read as a ranking of whether a company deserved assistance. It reflects the report’s counterfactual question: would the investment have occurred to a similar extent without federal support? The summary gives a qualified answer for GlobalFoundries and SK Hynix, and separates Texas Instruments’ tax-credit support from its grant or loan.
Will the act reduce reliance on imported chips?
PIIE expects domestic production to rise and sees a lower risk of future supply shortages, but is skeptical that the United States will stop relying on imported semiconductors. Building capacity at home can reduce exposure to disruptions without making the supply chain self-sufficient; the review does not claim that the program will eliminate imports.
The goal of producing 20% of the world’s leading-edge chips by 2030 remains uncertain. PIIE’s answer is “maybe,” rather than a prediction that the target will definitely be met. The report’s broader point is that a production target and a security outcome are related but not interchangeable: more output may help, yet policymakers still have to weigh which capacity is strategically valuable and what it costs.
How many jobs might the subsidies create?
PIIE estimates approximately 93,000 temporary construction jobs and 43,000 permanent jobs. It estimates the subsidy cost at about $185,000 per job-year. The report compares that figure with the average annual salary of U.S. semiconductor employees, saying the subsidy cost is about twice as high, and suggests other employment programs might create jobs more efficiently.
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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsA job-year is one job for one year, not a count of unique people hired. The construction estimate concerns temporary work; the permanent-job estimate describes ongoing positions. The cost-per-job-year figure is therefore a way to compare the public subsidy with employment over time, not a claim that every worker receives that amount or that the entire subsidy budget is a wage payment.
The review also questions whether policy has emphasized production incentives at the expense of research and development. As EE Times summarizes it, the report places the United States at the bottom of advanced countries for R&D subsidies to large, profitable firms. That is a policy trade-off the report raises alongside the question of how many manufacturing jobs the act supports.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Would tariffs work better than subsidies?
PIIE compares subsidies with a modeled 20% tariff using 2023 U.S. chip sales of about $70 billion and imported-chip sales of about $51 billion. In that scenario, domestic chip-price effects could amount to about $14 billion; about $10 billion would go to the Treasury as tariff revenue, leaving roughly $4 billion in producer benefit. These are figures from the report’s model, not observed results of a tariff that was imposed.
That modeled producer benefit is much smaller than the nearly $200 billion subsidy package. The report also warns that tariffs would raise costs for U.S. chip users, including autos, electronics and AI businesses, relative to their foreign competitors. It cites the European Union’s 17% tariff as having been judged a failure in promoting the EU semiconductor industry, and sees no compelling reason a comparable U.S. tariff would do better.
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The comparison is not simply “cash versus no cost”: subsidies draw on public funds, while tariffs can shift costs to domestic businesses that use chips. PIIE’s analysis suggests tariffs would provide less financial support to producers while creating a disadvantage for U.S. chip users.
What the review does—and does not—establish
The review’s strongest conclusion is not that the CHIPS Act failed. It expects the law to increase U.S. semiconductor production and improve resilience against future shortages. Its criticism is narrower: some recipients may have received grants or concessional loans they did not need in addition to a tax credit that the report considers important to moving projects forward.
Whether those awards were unnecessary is a counterfactual judgment. The summary notes that external evaluators lacked detailed CHIPS Program Office spreadsheets, and the available evidence does not establish what each company would actually have invested without support. PIIE’s project-by-project assessments are therefore best understood as a challenge to how assistance was allocated—not proof that every questioned award was wasteful, or that the same production and security gains could have been achieved without federal help.
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