In recent weeks, Biden and Senate Majority Leader Chuck Schumer have been taking victory laps for the 2022 CHIPS and Science Act, a law intended to create jobs and fund innovation in a key global industry. It has already launched a series of grants, incentives and research proposals to help America regain its cutting-edge status in global semiconductor manufacturing.
But quietly, in a March spending bill, appropriators in Congress shifted $3.5 billion that the Commerce Department was hoping to use for those grants and pushed it into a separate Pentagon program called Secure Enclave, which is not mentioned in the original law.
The diversion of money from a flagship Biden initiative is a case study in how fragile Washington’s monumental spending programs can be in practice. Biden’s legacy is bound up in the fate of more than $1 trillion in government spending and tax incentives aimed at transforming the economy — but even money appropriated for a strategic national goal can wind up being rerouted for narrow or opaque purposes.
Several members of Congress involved in the CHIPS law say they were taken by surprise to see the money shifted to Secure Enclave, a classified project to build chips in a special facility for defense and intelligence needs, and they worry it will hurt the law’s other policy goals.
“There should be no Secure Enclave in the CHIPS program,” said Rep. Zoe Lofgren (D-Calif.), ranking member of the House Science Committee, “and any secure program that might be necessary should be funded by the Department of Defense … not from CHIPS funding that should be focused on revitalizing our domestic chip capacity.”
Critics say the shift in CHIPS money undermines an important policy by moving funds from a competitive public selection process meant to boost a domestic industry to an untried and classified project likely to benefit only one company.
“I don’t know how this happened, but it should not have,” said Charles Wessner, an expert on global innovation policy at the Center for Strategic and International Studies.
No company has been named yet to execute the project, but interviews reveal that chipmaking giant Intel lobbied for its creation, and is still considered the frontrunner for the money.
An Intel spokesperson referred to CEO Pat Gelsinger’s previous remarks that the company is “in conversations” about the project, but declined to comment further.
The $3.5 billion hole also amplifies a larger concern about the landmark CHIPS Act shared by many of its original supporters — that a taxpayer-funded law meant to boost America’s skills and know-how in a key industry could be turning into a spigot for large corporate players, at the expense of the rest of the ecosystem it was intended to support.
The project has already forced changes to the administration’s plans for its CHIPS grant program. After the spending bill passed, the Commerce Department canceled a planned round of grants and blamed congressional appropriators for sending the money elsewhere.
Now at least two companies are reconsidering their plans to build semiconductor research centers that depended on that grant money, including one project