2024 Management Excellence

Mike Schmidt and the CHIPS Program Team

Implemented a multibillion-dollar program to supercharge the U.S. semiconductor industry that will increase domestic production of chips that are vital to our everyday life and strengthen American manufacturing and national security.

In 2022, Congress passed the bipartisan CHIPS and Science Act, a historic public investment in private industry designed to increase the manufacture of semiconductors in the U.S.—used in almost anything with an on/off switch, including mobile phones, computers, televisions, cameras and even light switches.

At the center of this effort is the $39 billion CHIPS Incentives Program, designed and implemented by Mike Schmidt and the Commerce Department’s CHIPS Program Office. In a little more than a year, the team has announced seven deals to incentivize new microchip manufacturing in the United States, totaling more than $29 billion so far in government investment. The team expects to announce billions in additional investments by the end of 2024, all aimed at strengthening America’s national security and competitive edge.

“This team has designed an innovative funding program that will help to rebuild a manufacturing industry that has been declining for decades in the United States. The dedication, perseverance and execution of the group has been remarkable,” said J.D. Grom, senior advisor to Commerce Secretary Gina Raimondo on CHIPS implementation.

Pandemic disrupts supply chains

Semiconductors, better known as chips, make modern life possible and are also critical in sectors that rely heavily on technology, such as artificial intelligence, automobiles, health care and national security.

In recent decades, the share of domestic production of these chips declined from a high of about 37% to as low as 12%. Today, most chips are made in Asia and none of the most advanced chips are made in America.

“For a long time, Economics 101 said it didn’t matter where chips were made,” said Ronnie Chatterji, a professor at Duke University who previously served as White House CHIPS coordinator.

But when the COVID-19 pandemic disrupted global supply chains, things changed: Entire industries were scouring the globe for chips to keep their work going. Automobile factories, for example, were forced to slow down production or even shut down entirely for a time.

“We realized during the pandemic how desperately vulnerable we were,” said Laurie Locascio, director of the National Institute of Standards and Technology. Addressing these vulnerabilities wasn’t just essential for economic security, it was also a matter of national security.

Getting to work

Soon after the CHIPS and Science Act became law, Raimondo tapped Schmidt to lead the CHIPS Program Office effort, which would be housed within the National Institute of Standards and Technology.

With “no playbook to follow,” according to Grom, he quickly built a talented team—now about 150 people who are experts in semiconductors, investment analysis, financial structuring, national security, workforce, large-scale government implementation and more—to put what Locascio calls a “high-pressure, highly visible” program in motion.

“What Mike and his team have shown is that government can move fast, and government can attract great people,” said Chatterji. “They are building this all up under a microscope, and if you move too slowly, you lose momentum.”

The team’s program “is flexible enough to ensure each award meets programmatic objectives,” said Grom.

Almost immediately after the law was passed, Schmidt got to work to build a team from scratch that opened applications for its first round of incentives. Getting to this point required building relationships of trust with private companies who are making the bulk of the investments in the projects supported through the CHIPS program.

The program’s first sizable grant was $1.5 billion in direct funding to GlobalFoundries, one of the largest semiconductor manufacturers in the U.S., to build and expand facilities used to produce chips for cars, satellites, electric vehicles, power grids, and 5G and 6G smartphones.

Other notable investments to date include $8.5 billion to Intel to spur construction and expansion of chip-making facilities around the country; up to $6.4 billion to Samsung to establish a comprehensive leading-edge semiconductor ecosystem in central Texas; up to $6.6 billion to a manufacturer in Arizona to produce the world’s smallest and most advanced semiconductors to date—2-nanometer chips that underpin all artificial intelligence; and up to $6.1 billion to Micron to onshore leading-edge memory chip production to the U.S. for the first time in decades.

Collectively, these leading-edge investments put the U.S. on track to produce roughly 20% of the world’s leading-edge logic chips by 2030, up from zero percent today.

“What they’ve been able to do is organize a channel with companies that respects the way grants are done but ensures these grants are going out across the country,” said Chatterji. “They’re trying to get a great deal for the American public.”

Unlike many government grant programs, Schmidt and his team have always viewed their application process as an iterative one, with both sides working together to negotiate an outcome that benefits everyone.

“We’ve been successful because of very excellent execution of the nuts of bolts of government that are hard to get right,” said Schmidt.