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A year and a half after President Joe Biden signed the $53 billion CHIPS and Science Act<\/a> into law, the U.S. share of global semiconductor manufacturing has actually decreased, and the government has spent less than half a percent of the money it committed to revitalizing the American microchip industry.\u00a0<\/p>\n But the tide is turning. The Biden administration this morning announced it would direct $5 billion<\/a> in CHIPS Act money toward a new training facility to boost workforce participation in a semiconductor industry dominated by foreign talent<\/a>. That\u2019s an indicator of much more to come: After a lengthy review period, the government will start giving out billions more over the coming months, primarily in the form of<\/a> grants to domestic chip manufacturers such as Intel<\/a>. <\/p>\n In any case, experts say, it\u2019s too early to ring the alarm bells on what was always designed to be a long-term policy.<\/p>\n \u201cIt\u2019s like complaining [during] the eighth month of a pregnancy that nothing has appeared yet,\u201d said Georgetown global innovation policy professor Charles Wessner in an interview with Fortune. <\/em>Wessner, a senior advisor at the <\/em>Center for Strategic and International Studies, called the CHIPS Act \u201can unprecedented program, both in its focus and its scale \u2026 I would venture that they\u2019ve actually made great progress.\u201d<\/p>\n The act aims to reverse a three-decade decline in American semiconductor manufacturing: The United States produced just 12%<\/a> of the world\u2019s chips in 2020, down from 37% in 1990. East Asian manufacturers such as Taiwan\u2019s TSMC and South Korea\u2019s Samsung<\/a> have emerged as leaders, with a near-complete duopoly on the advanced microprocessors that power high-consumption tech like virtual reality and artificial intelligence.<\/p>\n The CHIPS Act is the Biden administration\u2019s effort to turn the tide. It committed $53 billion toward subsidizing labor force development, semiconductor R&D, and building chip factories back in August 2022<\/a>. But as of last month, almost a year and a half later, the government has doled out only about $200 million in grants<\/a>\u20140.4% of the money it\u2019s committed. That\u2019s largely the product of a lengthy application process requiring chipmakers to wade through months of red tape in order to secure funds.<\/p>\n Big-name projects have also been pushed back: TSMC announced last month that its $40 billion plant outside Phoenix would delay production<\/a> a second time, potentially until 2028. And America\u2019s share of the global semiconductor market has continued falling, with no signs of a rebound: from 12% in 2020 to a projected 9.8% in 2024, per a SEMI study<\/a>.<\/p>\n Still, in one key way, the policy has already earned its worth: The private-sector investment the CHIPS Act has already attracted dwarfs the government\u2019s stake<\/a>.<\/p>\n \u201cThe chip industry is very simple,\u201d said Wessner. \u201cIf you want to play, you have to pay\u2014you have to provide incentives. We\u2019re incentivizing small amounts, relatively \u2026 The good news is that $50 billion [in federal money] has already attracted $200 billion in commitments from the private sector \u2026\u00a0The federal money isn\u2019t an incentive, it\u2019s a catalyst. We\u2019re not paying for the whole thing by any stretch.\u201d<\/p>\n The CHIPS Act spawned similar policies worldwide. Japan<\/a>, South Korea<\/a>, and the EU<\/a> all enacted laws promoting domestic semiconductor manufacturing last year. And China is putting a whopping $140 billion<\/a> behind building its own chips as it bets hard on electric vehicles<\/a> and AI<\/a>.\u00a0<\/p>\n In China, the impacts are already showing up: Nikkei reported<\/a> last September that with the help of government aid, over 80% of Chinese semiconductor manufacturers increased their R&D expenses in the first half of 2023.\u00a0<\/p>\n \u201cAre we making progress on these? Yes. Would everyone like it to be going faster? Yes,\u201d said Wessner. \u201cWhen you have a weapons program in the Defense Department, and it doesn\u2019t work, and it costs three times what it\u2019s supposed to cost, we reboot and we keep working on it\u2014because we want the weapon. You have to take the same perspective here.\u201d<\/p>\n The semiconductor world was thrown for a loop yesterday when the Wall Street Journal<\/em> reported<\/a> that OpenAI CEO Sam Altman is seeking up to $7 trillion (yes, trillion) in capital to reshape the global semiconductor supply chain and expand computing capacity to meet the demands of AI. Even if Altman secures the money\u2014the UAE\u2019s sovereign wealth fund and Japanese conglomerate SoftBank have been floated as potential investors\u2014he\u2019ll run into the same problem the Biden administration has been dealing with: Building up semiconductor infrastructure takes time.<\/p>\n \u201cThere are two things that we usually criticize [the government] for,\u201d said Wessner. \u201cThe first is that it\u2019s taking too long. And secondly, that the grants were made too hastily. You can write that [article] in another couple months.\u201d<\/p>\n<\/div>\n\nSubscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up<\/a> for free.<\/div>\n