- Propmodo Focus
- Posts
- Is the CHIPS Act Really Moving the Needle on Manufacturing?
Is the CHIPS Act Really Moving the Needle on Manufacturing?
Defining the future of real estate
Holly Dutton
April 05, 2024
PRESENTED BY JUNIPER SQUARE
Propmodo Daily
By Holly Dutton · Apr. 5, 2024
Greetings!
Today’s email is presented by Juniper Square, an investment management platform for commercial real estate. Check out their new podcast: The Distribution, where some of the biggest names in commercial real estate have open and honest conversations about what’s happening in real estate and private markets.
President Biden’s CHIPS and Science Act promised a domestic semiconductor boom, weaning the US off China's chip dominance. But the initiative is facing delays due to unreliable funding streams, a worker talent gap, and the high cost of building chip plants. In today's email, we look at whether or not the US can overcome these hurdles and recapture chipmaking glory and what that could mean for the real estate industry.
Also, this week Propmodo Technology delves into the realm of capital project management, thanks to our sponsor, Nuveen Green Capital. We'll explore how advancements in technology are transforming the management of commercial construction expenses, the role of green loans in funding clean energy initiatives and energy-efficient improvements in buildings, and the growing acceptance of C-PACE, a financing option once seen as niche.
Now, let's dig in!
Is the Chips Act Really Moving the Needle on Manufacturing?
One of President Biden’s biggest victories during his time in office has been the passage of the bipartisan CHIPS and Science Act, aimed at reviving America’s manufacturing industry. The legislation was passed in August 2022 and authorized around $280 billion in new funding to help boost research and manufacturing on U.S. soil. It’s a sector that has experienced overwhelming changes over the past several decades.
Since 1997, the number of manufacturing firms and plants across the U.S. has fallen by around 25 percent, according to Deloitte. A big part of today’s manufacturing landscape is the production of semiconductors or chips, and leaders, including President Biden, want the work to be done here, not in China. A lot has been promised with the new bill, namely hundreds of thousands of jobs and billions of dollars worth of new manufacturing facilities, but major projects from some of the top chip manufacturers are being pushed back.
It’s now been more than 18 months since CHIPS was signed into law, and we’re getting a better look at what’s been accomplished and what’s in the works. Late last month, the Biden Administration announced that $8.5 billion is being set aside for Santa Clara-based Intel to develop or expand factories in four different states, and the Taiwanese chip maker TSMC is anticipated to receive $5 billion for two facilities that are currently being constructed in Arizona. Though the announcement of the latest round of funding is an important step forward for the CHIPS Act, the major manufacturers that are benefitting from the funding have been running into problems getting their expansion plans off the ground.
TSMC has pushed back the start date of manufacturing at its first factory in Arizona from this year to 2025 and also pushed back producing chips at its second plant by one to two years. The delays have been attributed to uncertainty over federal funding and a need for more skilled workers to install the highly sophisticated equipment the facilities require. Intel has also made changes to its production schedule, pushing back the completion date of its $20 billion project in Ohio to 2026 instead of 2025.
The CHIPS Act has been a highly touted, major piece of legislation that is expected to spur huge growth for U.S. manufacturing. Reviving key manufacturing industries could boost U.S. GDP by more than 15 percent by 2030, according to a study by McKinsey. It would create hundreds of thousands of jobs and help the U.S. sharply curb its dependence on China for the technology, something that many elected officials increasingly want to see happen.
For the real estate industry, a resurgence in manufacturing means a ton of new development, both of the facilities themselves and the new housing, retail, and offices that could follow in its wake. But while the U.S. has regained all the factory jobs that were lost during the pandemic, some states have not fared as well due to factories shuttering. That, plus the steep cost of building semiconductor facilities and delays in development, are keeping the manufacturing renaissance moving at a slow pace.
PRESENTED BY JUNIPER SQUARE
The Distribution: A Podcast by Juniper Square
The Distribution by Juniper Square, hosted by Chief Real Estate Officer, Brandon Sedloff, sits you down with some of the biggest names in commercial real estate for open and honest conversations about what’s happening in real estate and private markets.
Past guests include:
And more!
Listen to The Distribution by Juniper Square on Spotify, Apple Podcasts, YouTube, or wherever you get your podcasts.
Insider Insights
🚂 All aboard: Despite the broader banking system's resilience, the Federal Reserve has said it expects a prolonged period of turbulence for banks due to the faltering commercial real estate market, calling it a “slow-moving train.”
🌎️ Green team: Cushman & Wakefield has appointed its first chief sustainability officer to oversee the brokerage's environmental efforts and advise clients on their own green initiatives as the importance of climate risks grows across the globe.
Popular Articles
Propmodo Technology: Capital Projects Management
More Upcoming Propmodo Technology Deep-Dives:
🏠️ Multifamily Development
🏢 Asset & Investment Management
🪞 Digital Twin
🛗 Vertical Transportation
🛍️ Retail Real Estate Analytics
Interested in collaborating on one of these topics to reach over 70,000 commercial real estate professionals? Email [email protected]
Are You Enjoying This Newsletter?
Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.
📧 Forward it to a friend and suggest they check it out.
🔗 Share a link to this post on social media.
🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.
✅ Not subscribed yet? Sign up for this newsletter here.
📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.
Explore Propmodo
Read exclusive articles about a variety of topics, including Real Estate, Workplace, Buildings, and Development.
Browse our collection of interactive Propmodo Research e-books.
Sign up for upcoming Propmodo Live Webinars or watch past Propmodo Live videos on-demand.
Dive into Propmodo Technology articles, podcasts, and short videos about the future of commercial real estate.
Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.
Interested in sponsoring this newsletter? Email [email protected]