chips act powers nsf innovation program

2025-06-02 general

Washington, Monday, 2 June 2025.
The CHIPS and Science Act, signed into law on August 9, 2022, is launching the National Science Foundation (NSF) Regional Innovation Engines program. The act plans to invest billions in research, manufacturing and American competitiveness. The program moves beyond incentives for corporations, such as TSMC and Intel. It aims to foster broader technological advancement and regional economic growth throughout the United States. Up to $1.6 billion will fund the NSF Engines program. This initiative seeks to create industries of the future in communities historically overlooked in tech booms. The act directs multi-billion dollar investments in R&D and economic development, spanning from chips and AI to battery storage and biotech.

Semiconductor sales outlook

The semiconductor industry is currently navigating a complex landscape. Electronics sales for 4Q24 saw a 15 percent increase quarter-over-quarter and year-over-year respectively [5]. However, a subsequent decline of 16 percent is expected for 1Q25, with sales remaining flat into 2Q25 [5]. Despite this near-term volatility, full-year electronics sales are projected to grow by 4 percent year-over-year in 2025 [5]. Integrated circuit (IC) sales present a brighter picture, with a 32 percent increase quarter-over-quarter and year-over-year in 4Q24 [5]. This growth is expected to continue with a 23 percent year-over-year increase in both 1Q25 and 2Q25 [5].

Inventory and fab utilization

Weak consumer demand has led to a rise in IC inventories, increasing 6 percent year-over-year in 4Q24 [5]. Further increases of 1 percent and 4 percent quarter-over-quarter are anticipated for 1Q25 and 2Q25, respectively [5]. Despite these inventory concerns, fab utilization rates are expected to recover during 2Q25 [5]. Improvement in the industrial and automotive sectors is expected to drive this recovery from 2Q25 onward [5]. These factors suggest a potential shift in market dynamics as the year progresses, presenting opportunities for strategic investment and inventory management.

Investment shifts and growth drivers

Global fab equipment investment is projected to experience substantial growth, rising from $56 billion to $143 billion [5]. This surge in investment reflects a significant shift in fab investment composition. Logic and micro investments are expected to increase from 39 percent in 2021 to 49 percent in 2028 [5]. Conversely, memory investments are projected to decrease from 41 percent in 2021 to 33 percent in 2028 [5]. AI is anticipated to be the primary catalyst for growth in the semiconductor industry in the coming years [5]. Top cloud service providers (CSPs) are expected to invest close to $300 billion in capital expenditures in 2025 [5].

Geopolitical impacts on fab investment

Semiconductor fab investment is set to increase in several key regions. America’s investment will rise from $24 billion in 2024 to $33 billion in 2028 [5]. Europe will see an increase from $5 billion in 2024 to $15 billion in 2028 [5]. Japan’s investment will grow from $10 billion in 2024 to $18 billion in 2028 [5]. Taiwan’s investment will increase from $19 billion to $30 billion in 2028 [5]. Korea’s investment will rise from $22 billion in 2024 to $32 billion in 2028 [5]. Southeast Asia will see growth from $5 billion in 2024 to $7 billion in 2028 [5]. China’s investment is expected to decrease from $63 billion in 2024 to $28 billion in 2028 [5].

Regional growth rates and capacity

From 2020 to 2028, America is projected to experience a compound annual growth rate (CAGR) of 19 percent [5]. Europe and the Middle East are expected to grow at 21 percent [5]. Japan’s growth is projected at 10 percent, while Korea is expected to grow at 9 percent [5]. China’s growth rate is estimated at 5 percent [5]. Southeast Asia and the rest of the world are anticipated to grow at 20 percent, and Taiwan at 7 percent [5]. Global fab capacity is projected to grow at 5.3 percent from 2024 to 2028 [5]. China’s fab capacity is expected to grow at 8.1 percent [5]. Logic and micro capacity are projected to grow at 8.7 percent [5].

Bronnen

chips act nsf engines