CHIPS Act: How U.S. Chip Policy Is Reshaping Global Manufacturing

When you hear CHIPS Act, a U.S. law passed in 2022 to boost domestic semiconductor manufacturing and reduce reliance on foreign chip production. Also known as the Chips and Science Act, it’s not just about money—it’s about reweaving the global supply chain for electronics. This law handed out over $52 billion in subsidies, tax breaks, and grants to companies building chip factories in America. But its real impact? It’s forcing manufacturers everywhere—especially in India—to rethink where and how they make electronics.

The semiconductor manufacturing, the process of designing and producing microchips used in everything from smartphones to medical devices industry has been dominated by Taiwan, South Korea, and China for decades. But the CHIPS Act changed the game. Companies like Intel, TSMC, and Samsung are now building massive new plants in Ohio, Arizona, and Texas. Why? Because the U.S. government is paying them to. And that’s pulling raw materials, equipment suppliers, and skilled workers away from Asia. For India, this isn’t just competition—it’s a wake-up call. If you’re making smartphones, solar inverters, or medical devices here, you’re still relying on imported chips. The CHIPS Act is making those imports more expensive and harder to get.

That’s why the electronics supply chain, the network of companies and processes that turn raw materials into finished electronic products is shifting. Factories in Tamil Nadu and Karnataka that once relied on cheap, fast chip deliveries from abroad are now scrambling to find alternatives. Some are partnering with Indian startups trying to build local chip design capabilities. Others are pushing for better government incentives—similar to the CHIPS Act—to make domestic production viable. Meanwhile, small manufacturers in India are learning that if they want to survive, they need to understand not just how to assemble devices, but how to plan for chip shortages, price spikes, and geopolitical risk.

The CHIPS Act didn’t just create jobs in America—it triggered a global chain reaction. It’s pushing countries like India to invest in their own chip ecosystems, or risk falling further behind. You can’t ignore it if you’re in manufacturing. Whether you’re building a startup, running a small factory, or just trying to source parts, this law affects your costs, your timelines, and your future. Below, you’ll find real examples of how this policy is already changing what’s made in India, who’s winning in electronics exports, and how small manufacturers are adapting—or getting left behind.