The highly touted bipartisan CHIPS and Science Act, one of the top legislative victories of President Biden’s tenure, is quietly tied to a number of diversity, equity and inclusion (DEI) initiatives that critics argue contravene the law’s objectives.
The legislation, which Biden signed in August 2022, is designed to shore up U.S. semiconductor supply chains, earmarking $52.7 billion to establish the CHIPS for America Fund, which supports private-sector investment in domestic research and manufacturing. However, according to a review of federal filings, the funding is contingent on applicants meeting a series of DEI requirements.
“If you look through the notice of funding opportunity, which is the Commerce Department’s requirements in order to get funding, there’s literally the word diversity, equity and inclusion and DEI requirements littered throughout,” said Chris Nicholson, head of research at the firm Strive Asset Management. Strive, which was founded by former presidential hopeful Vivek Ramaswamy, has more than $1 billion in assets.
“Although this money is announced in some sense, it’s not even going to be given,” said Nicholson, who has researched the semiconductor industry. “That’s the key here. It’s not even going to be given unless [funding recipients], step by step, they meet, and they prove they’re meeting all of these DEI requirements.”
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Months after Biden signed the CHIPS and Science Act into law, the Department of Commerce’s National Institute of Standards and Technology (NIST) issued its first funding opportunity for companies seeking to develop semiconductor projects. NIST Director Laurie Locascio said at the time that funding decisions would be targeted to “maximize the impact of every public dollar spent.”
However, the funding opportunity has a lengthy list of DEI requirements that would force semiconductor makers to, for example, “develop an equity strategy” that describes “specific efforts to … promote diversity, equity, inclusion, and accessibility.”
This week, Rep. Jim Banks, R-Ind., who chairs the House Anti-Woke Caucus, circulated a memo first obtained by Fox News Digital, highlighting the requirements. In the memo, he blasted the Biden administration for prioritizing DEI, arguing it would discourage foreign investment in the U.S. and had already contributed to project delays.
“Attempting to make America stronger and more prosperous, but also more woke, is self-defeating,” Banks told Fox News Digital in a statement. “A woker America is a weaker America.”
According to Banks’ memo, applicants for CHIPS for America funding must have a plan to employ ex-convicts, expand employment opportunities for people with “limited English proficiency,” hire more women for construction jobs, and produce a plan for contracting “diverse suppliers” that are women- and minority-owned.
In addition, applicants for large grants must guarantee “affordable, accessible, reliable, and high quality” child care for all workers, including all construction workers, allowing CHIPS and Science Act funding to be used for child care center construction.
And the Department of Commerce’s funding notice mandates applicants submit a climate and environmental justice plan accounting for “climate-related risks that may occur over the lifetime of the facility” while giving preference to applicants whose operations are operated by 100% green energy.
“All you have to do is look at the nature of the requirements themselves, and you can see that they’re an enormous roadblock,” Nicholson told Fox News Digital.
He noted that the requirement to hire diverse suppliers could be playing a significant role in delaying proposed semiconductor projects nationwide. Nicholson added that another funding provision strongly encouraging applicants to employ union labor is also likely to add considerable costs to manufacturers.
Last year, South Korea’s then-minister of trade, industry and energy, Lee Chang-yang, expressed concern about “conditions attached to the act,” specifically noting the Biden administration’s child care requirements, and added that investing in the U.S. semiconductor supply chain is “becoming less appealing,” Korean Economic Daily reported at the time.
In a statement to Fox News Digital, the White House blasted Banks’ memo and said the CHIPS and Science Act was doing its job of attracting new investment in America.
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“Thanks to President Biden’s Investing in America agenda, companies from across the world are investing billions of dollars building factories across the country and training veterans, people from rural communities, and Americans from all walks of life for the well-paying jobs they’ll provide,” White House spokesperson Robyn Patterson wrote.
“Shovels are in ground, facilities are already under construction, and Americans are already feeling the benefits of this President’s economic agenda. It’s sad that Congressman Jim Banks joined the CCP in opposing the landmark CHIPS and Science Act helping to keep manufacturing jobs here at home.”
Since Biden signed the legislation, the federal government has announced multiple nonbinding preliminary agreements with semiconductor industry players worth billions of dollars. The most recent such agreement — $8.5 billion in potential direct funding for several projects being developed by California-based tech firm Intel — was announced Wednesday.
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But some of the ambitious plans to build semiconductor production in the U.S. have faced significant delays. Last month, Intel abruptly halted construction of its $20 billion Ohio plant, and this week, five suppliers delayed construction of facilities in Arizona aimed at supporting plants being developed by Intel and Taiwan Semiconductor Manufacturing Co. (TSMC).
Intel declined to say if the Biden administration’s requirements were delaying any of its plans but said it was “positioned to meet its obligations.”
“We are grateful for the support from the Biden Administration, the Department of Commerce, and the entire U.S. government in our shared mission to strengthen the nation’s semiconductor industry,” Intel spokesperson William Moss told Fox News Digital. “Intel is well positioned to meet its obligations and will judiciously adhere to all reporting requirements and milestones set forth by the Department of Commerce.”
“Wafer fabrication sites typically require three to five years from groundbreaking to production, subject to business conditions and other factors,” he added.
TSMC did not respond to a request for comment.
Overall, semiconductors are vital for supporting a wide range of communications, science, medical and energy technologies. But China currently dominates the global supply chain, accounting for an estimated 31.4% of worldwide final sales, according to Citigroup research.
