Did the CHIPS Act Trigger the Manufacturing Construction Boom?
A forensic accounting of industrial policy effects
This is a cross post between Briefing Book and Factory Settings. Founded by veterans of both academia and policymaking, Briefing Book is a publication focused on clear-eyed economic analysis. Interested readers can subscribe here. Factory Settings is a publication led by the former CHIPS Program Office senior leadership about state capacity and industrial policy. Interested readers can subscribe here.
Editor’s note: Our first Factory Settings piece kicked up some debate about whether the CHIPS Incentives Program actually catalyzed semiconductor manufacturing construction investment. Detractors suggested that market forces were the true drivers, pointing out that construction planning began before CHIPS’s enactment and that construction spending was likely to occur regardless.
Analyzing the efficacy of public policy is important, and methodology matters. We tapped Skanda Amarnath, co-founder and Executive Director of Employ America, to write a comprehensive analysis of how manufacturing construction spend evolved over CHIPS’s legislative arc. The real options analysis Skanda uses here is a valuable lens for investigating industrial policy effects. His analysis makes clear that absent CHIPS, manufacturing spending would not have seen the same growth. We hope this piece sparks discussion about how to evaluate policy efficacy and invite your thoughts on the analysis.
The surge in US manufacturing construction spending since 2021 is one of the most prominent macroeconomic developments of the post-pandemic period. Construction of manufacturing facilities has risen sharply from a low base, contributing meaningfully to business fixed investment.1
The hockey-stick increase in spending is not in dispute. What remains less settled is how much of the surge is attributable to federal industrial policies — particularly the CHIPS and Science Act, signed into law in August 2022 — as opposed to other policies (like the Bipartisan Infrastructure Law or the Inflation Reduction Act) and market forces (like the advent of artificial intelligence models like ChatGPT) that would have driven manufacturing investment regardless. This question is key to both evaluating the return on public expenditure and understanding the structural forces shaping the US investment landscape going forward.
Skepticism about CHIPS’s effects on construction spending may stem from a January 2025 FEDS Note. The analysis uses project-level data from Dodge Data & Analytics to trace manufacturing construction from planning to construction starts.2 The central finding is that planning activity for new manufacturing facilities surged in 2021 — well before CHIPS was enacted — and that the mid-2022 peak in construction starts was driven by projects that firms began planning before the legislation became law. Based on that evidence, a natural inference is that the boom was already underway on its own market-driven logic, and that CHIPS may not have been so relevant to the historic rise in construction spending.
A more granular analysis of the planning data challenges that simplistic reading. The CHIPS Act had a long and public legislative history that made it possible to track the likelihood of passage well before its enactment; firms were likely planning their construction activity based on policy expectations even during the 2021 pre-passage surge the FEDS Note identifies. Breaking down the planning data by manufacturing subsector and census division makes apparent that a substantial share of the construction uptick was concentrated in the industries and geographies most relevant to CHIPS award funding, suggesting that the policy effects were more potent than a focus on the enactment date alone implies.
The conclusions we can and can’t draw from the Dodge data
The FEDS Note illustrates the manufacturing construction pipeline, analyzing Dodge data on more than 20,000 manufacturing construction projects dating back to 2019. The analysis tracks when projects entered the planning stage, how long they spent in planning, whether they were abandoned or revised in scope, and when they proceeded to a construction start. A planning start, as defined by the authors, is when a plan first emerges in the observed Dodge data, whereas a construction start is defined as “the commencement of physical work or the expectation of such work within the next few months.”
Planning starts for new manufacturing projects were very low in 2019 and 2020, mirroring subdued nonresidential structures investment in the pre-pandemic period. Activity surged beginning in 2021, peaked around the time of CHIPS and IRA enactment in August 2022, and has since trended down with some volatility.
Construction starts also surged (though at a lag behind planning activity) and peaked around mid-2022. That peak was largely driven by projects that had been in planning for less than one year. The planning pipeline has since grown substantially, but the share of newer plans (less than one year old) has declined since mid-2023. The authors note that it is unclear whether the aging pipeline is a positive or negative signal for future construction activity. If new plans emerge in anticipation of ripening policy conditions, it’s reasonable to expect a surge in new plans in the lead-up to policy enactment, and a decline in activity in the absence of further favorable policy shocks.
This analysis invites a range of plausible inferences, but the FEDS Note is careful in its conclusions, calling for continued monitoring rather than making strong claims about causation. But the timeline it documents — a planning surge that predates enactment — naturally invites a skeptical reading of policy effects. The key question is whether the enactment date is the correct timestamp for when policy began to shape firm behavior, or whether the relevant policy signal arrived earlier and through different channels.
Optionality is valuable
Planning activity could easily be construed as a response to enacted policies, but we can also evaluate it as anticipatory behavior. This shift rests on framing pre-construction activity in terms of option premium.3
Planning is a necessary but not sufficient condition for a project to be seen through to completion. Every stage of a project entails rational speculation about the likelihood that economic and policy conditions will ripen sufficiently to make the project viable. And while pre-construction activities can have substantial costs — including engineering and design work, permit acquisition, site preparation, and environmental assessments — they are often just a small percentage of the project total, which includes building, equipment installation and costs, and commissioning. As the Dodge data defines it, “planning is most typically associated with hiring an architect to create plans.” Given how little effort that entails, it is not a surprise that projects are more likely to be canceled in the planning stage than after commencing construction. In that context, planning is analogous to the cost of an option premium, while starting construction — presumably under ripe economic and policy conditions — is akin to exercising that option.
When the policy or economic backdrop is more uncertain and volatile, as was the case in the lead-up to CHIPS’s enactment, options have heightened value. Firms may be able to hold permits, maintain site options, and keep engineering work current while waiting for the policy backdrop to improve. To the extent that economic and policy uncertainty tied to the potential passage of CHIPS affected the economic viability of major projects, relatively low-cost planning was more valuable and served as a rational anticipatory step. The FEDS Note showed variable and sometimes long lags between planning and starts, consistent with how firms would seek to optimize when to exercise their options.
Options are particularly valuable in that they enable decisions in response to new information. The relatively modest expenditure on planning positioned firms opportunistically for a legislative breakthrough on CHIPS, enabling rapid scale-up in response to policy developments.
Per the Dodge data, construction starts appear to cluster around key policy developments. The FEDS Note’s finding that plans surged before CHIPS’s passage would be consistent with firms accumulating options when the CHIPS Act was a real possibility, but only starting projects after policy conditions, namely enactment, sufficiently ripened.
A critical feature of CHIPS’s implementation is that awardees were not required to start projects from scratch at the point of enactment. Firms that had already begun planning — or even preliminary site work or construction — were eligible for CHIPS awards. If firms anticipated these subsidies, it’s conceivable that the expectation could set investment in motion. Allowing subsidies for work that was already underway means it was even more likely that pre-enactment planning activity was a response to policy, rather than independent of it.
The CHIPS Act’s legislative arc
The strongest counterargument to timing-based skepticism is that the CHIPS Act did not arrive as a complete surprise. The legislation was the culmination of a multi-year, bipartisan effort that spanned two Congresses, multiple committees, multiple presidential administrations, and several distinct pieces of legislation. During that multi-year gestation, the probability of some form of federal semiconductor manufacturing subsidy moved from speculative to likely; the firms with the most to gain had strong incentives to position themselves in advance.
Tracing the legislative arc from inception to enactment helps clarify when the policy signal first became salient to firm investment decisions.
[NB: This granular breakdown of CHIPS’s legislative history illustrates the incremental developments firms may have responded to. A higher-level milestone summary follows.]
Phase 1: Origins and introduction (2019–2020)
The CHIPS and Science Act emerged from growing bipartisan concern about US competitiveness with China in critical technologies. In October 2019, Under Secretary of State Keith Krach presented a Global Economic Security Strategy to Senators Chuck Schumer and Todd Young, proposing a dramatic increase in government R&D investment with matching private-sector contributions.
Two parallel legislative tracks emerged in 2020. The first was the Endless Frontier Act, introduced on May 27, 2020, by Senators Schumer and Young alongside Representatives Ro Khanna and Mike Gallagher, which proposed a $100 billion expansion of the National Science Foundation to accelerate research in key technology areas. The second was the CHIPS for America Act, introduced on June 10, 2020, by Senators John Cornyn and Mark Warner in the Senate and by Representatives Michael McCaul and Doris Matsui in the House the following day. This bill called for $52 billion in federal incentives to restore US semiconductor manufacturing capacity, which had declined from 37% of global production in 1990 to roughly 12% by 2020. Alongside those legislative developments, the State Department successfully brokered TSMC’s $12 billion commitment to build a fabrication facility in Arizona, announced on May 15, 2020.
Phase 2: Authorization without appropriation (late 2020 – early 2021)
The CHIPS for America Act’s key provisions were incorporated into the National Defense Authorization Act (NDAA) for Fiscal Year 2021, which was signed into law on January 1, 2021. This authorized the creation of semiconductor incentive programs, a National Semiconductor Technology Center, and related R&D initiatives. However, the NDAA authorized these programs without appropriating any funding, meaning Congress would need to pass separate legislation to provide the $52 billion authorized.
At this stage, semiconductor firms could observe that a bipartisan consensus favored federal support for domestic chip manufacturing, but the probability of actual funding remained uncertain.
Phase 3: Senate action — the US Innovation and Competition Act (2021)
The 117th Congress saw rapid acceleration of legislation for semiconductor investment. The Endless Frontier Act was reintroduced as S. 1260 on April 20, 2021, and quickly advanced through the Senate Commerce Committee, passing by a bipartisan vote of 24–4 on May 12, 2021. Majority Leader Schumer then used the bill as a legislative vehicle for a much broader package: on May 18, 2021, he filed a substitute amendment that merged the Endless Frontier Act with contributions from five other Senate committees, including $52 billion in emergency appropriations to fund the CHIPS Act programs authorized in the FY2021 NDAA. The expanded package was renamed the United States Innovation and Competition Act (USICA). The Senate passed USICA on June 8, 2021 by a vote of 68–32, with strong bipartisan support. A 68-vote Senate majority for a bill containing $52 billion in semiconductor subsidies represented a qualitative shift in the probability of enactment.
The 2021 planning activity surge documented in the FEDS Note aligns with these dates. It’s quite plausible that firms saw the Senate vote as a substantive signal that federal subsidies were increasingly likely. Even if far from perfectly certain, subsidies may have been probable enough to justify the relatively low-cost step of initiating planning.
Phase 4: House action — the America COMPETES Act (2022)
Rather than taking up USICA directly, the House developed its own comprehensive competitiveness package. On January 25, 2022, House Democrats unveiled the America COMPETES Act of 2022, which also included $52 billion for CHIPS programs, but differed substantially from USICA in its science policy architecture, trade provisions, and inclusion of immigration reform measures. The House passed the America COMPETES Act on February 4, 2022, by a vote of 222–210, largely along party lines. On March 28, 2022, the Senate passed an amended version by substituting USICA text into H.R. 4521, formally creating the procedural conditions for a bicameral conference committee to reconcile the two bills.
As the House took up, and then passed, the America COMPETES Act, construction starts correspondingly surged as congressional action increased the likelihood of an eventual CHIPS passage.
Phase 5: Conference negotiations and passage (2022)
A formal conference committee convened in May 2022, but negotiations proved contentious. By early July, talks had stalled over disagreements on the structure of the proposed new NSF directorate, trade policy provisions, and other issues. Senate leaders considered advancing a narrower bill focused solely on semiconductor subsidies.
The semiconductor industry sounded concerns during this period, with companies explicitly conditioning major US investments on the passage of CHIPS funding:
Intel was notably clear in its posture — in late June 2022, CEO Pat Gelsinger delayed the groundbreaking ceremony for Intel’s $20 billion Ohio fabrication complex due to congressional inaction. Speaking at the Aspen Ideas Festival on June 28, Gelsinger warned that without subsidies, Intel would redirect investment to Europe, where governments had moved faster to approve funding.
GlobalWafers, a Taiwanese semiconductor wafer manufacturer, announced a $5 billion US factory plan on June 27, 2022, but made the investment explicitly contingent on CHIPS funding. Commerce Secretary Gina Raimondo amplified the urgency, stating that the GlobalWafers deal would collapse without congressional action before the August recess.
TSMC board member and minister of Taiwan’s National Development Council Ming-Hsin Kung similarly signaled on June 28, 2022 that pace of construction and expansion of TSMC’s Arizona facilities depended on the passage of the CHIPS Act.
After a legislative breakthrough on July 19, 2022, the final package passed the Senate on July 27, 2022, by a vote of 64–33, and the House on July 28, 2022, by a vote of 243–187. President Biden signed the CHIPS and Science Act into law on August 9, 2022, appropriating $52.7 billion for semiconductor programs (including $39 billion for manufacturing incentives) and authorizing roughly $174 billion for science and technology investments.
Policy milestone summary
The following table summarizes the key milestones in the CHIPS and Science Act’s legislative journey, illustrating the mounting probability of enactment that firms could observe in real time.
The projects CHIPS supported: scale and location
Studying the scale and geographic distribution of CHIPS awards concretizes the connection between the policy arc and construction spending data.
As of February 2026, the CHIPS Program Office has issued preliminary or finalized awards to over 30 companies across over 45 project locations. The total direct federal funding committed is approximately $31 billion, with an additional $5.5 billion in government loans. As large as these awards were, they were dwarfed by the total private capital expenditure associated with these projects; estimates suggest nearly $400 billion in planned company investment across all CHIPS-supported sites. These capex figures span multi-year investment horizons; absent CHIPS, market forces may have necessitated some smaller portion of investment.
The largest awards and their geographic footprints
The distribution of CHIPS-associated investment is heavily concentrated in a small number of megaprojects. The five largest award groups — Intel, TSMC, Micron, Samsung, and GlobalFoundries — account for $27 billion of the $32.4 billion in direct federal awards and an estimated $304 billion of the $355 billion in total planned investment (86%).
The geographic distribution of CHIPS-associated capital expenditure is also regionally concentrated. While construction is largely still pending for projects in the Northeast, the bulk of the major projects were located in either Mountain census division states (Arizona, Idaho, Utah, New Mexico) or Texas.
Three census divisions — Mountain, West South Central, and Middle Atlantic — account for 80% of all CHIPS awards, and likely an even larger share of total firm investment. That said, most of the Middle Atlantic projects either have yet to begin or have only begun very recently. To investigate how CHIPS awards align with our observations of construction spending data, we should focus on construction spending that commenced over the relevant time period and in the regions where funded projects are located. $23.3 of the $32.4 billion in CHIPS awards were for projects where construction was confirmed to have started before 2025, and the Mountain and West South Central census divisions alone make up 65% of these CHIPS awards. If the CHIPS Act influenced construction spending, these two regions would likely stand out.
Triangulating policy effects
A cross-sectional analysis of the construction spending surge helps disentangle what’s driving the aggregate hockey-stick trend. This granular subsector data clarifies that the surge was a policy-driven and sector-specific boom rather than a market-driven cycle across all of manufacturing.
CHIPS-related subsector growth outpaced other industries
The construction spending increase is decisively concentrated in subsectors related to CHIPS efforts. When categorized by end-use subsector, Census Bureau data on manufacturing construction spending — reported as a seasonally adjusted annual rate (SAAR) — shows that the Computer/Electronic/Electrical category has driven most of the increase in total construction spending on manufacturing facilities.4
The Computer/Electronic/Electric category corresponds to NAICS 334, Computer and Electronic Product Manufacturing, and NAICS 335, Electrical Equipment, Appliance, and Component Manufacturing. NAICS 334 encompasses semiconductor fabrication and electronic component manufacturing — the direct target of CHIPS subsidies — and also spans photovoltaics and sensors that may have been supported by the Inflation Reduction Act (IRA), which was passed shortly after CHIPS; NAICS 335 captures batteries, electrical equipment, and related components that were intertwined with the tax credit provisions of the IRA.
Unfortunately for those of us interested in causal identification, the IRA was enacted just after the CHIPS Act, further muddying the analysis. But the concentration of nearly two-thirds of the incremental spending in the two subsectors most directly targeted by federal industrial policy is a meaningful signal, even if it fails to disentangle IRA and CHIPS-related support.
In the fourth quarter of 2019, construction spending in the Computer/Electronic/Electrical subsector ran at a SAAR of approximately $9.1 billion, representing 11.2% of total manufacturing construction; by the fourth quarter of 2022 — a few months after CHIPS enactment — this figure had risen to $63 billion (41.9% of the total). That proportion continued to climb, peaking in the fourth quarter of 2023 at $117.7 billion SAAR, or 52.4% of all manufacturing construction spending. As of the latest data release for October 2025, the three-month moving average stands at $97.6 billion SAAR (45.3%), marginally lower as many commenced construction projects tied to CHIPS reach completion. The increase in this single combined category accounts for roughly $89 billion of the $135 billion total increase in manufacturing construction SAAR since the fourth quarter of 2019 — approximately 66% of the overall gain.
If this surge were the result of generic post-COVID demand recovery, supply chain diversification, or commodity economics, we would expect to see broader distribution across food processing, chemicals, fabricated metals, and other subsectors. The Chemical subsector (NAICS 325) is the only other category that shows a substantial increase, rising from $32.7 billion SAAR in the fourth quarter of 2019 to $45.8 billion in the latest construction spending data release. This may be consistent with investment and production tied to the liquefied natural gas, pharmaceutical, or other specialty chemical industries, but its $13 billion increase is modest relative to the $89 billion gain in Computer/Electronic/Electrical. Food/Beverage/Tobacco, Transportation Equipment, and other categories have either been relatively flat or shown only moderate growth.
Manufacturing construction spending by subsector (SAAR, billions). The Computer/Electronic/Electrical category dominates the post-2021 increase, with policy milestone dates shown for reference.
To disentangle the investment effects of the CHIPS Act from the IRA, we have to rely on other datasets with greater sectoral granularity. These datasets tend to lag the Census Bureau’s timely monthly construction spending estimates by 2-3 years, but from what we can see, there is a prominent effect in the sectors most relevant to the CHIPS Act, and separable from the IRA. The latest data from the Census Bureau’s Annual Capital Expenditures Survey (ACES) — now within the Annual Integrated Economic Survey (AIES) — runs through calendar year 2022, just as the surge in manufacturing construction spending was getting going.
Based on the ACES data, total capital expenditures on computer and electronic product manufacturing structures (NAICS 334, more relevant to CHIPS) were estimated at $11.8 billion in 2022, of which $10.1 billion was estimated to be for semiconductor and other electronic component manufacturing. Compare this to the $1.3 billion of total capital expenditures allocated to structures for the manufacturing of electrical equipment, appliances, and components (NAICS 335, more relevant to the IRA).5 This suggests a roughly 90% to 10% split between the manufacturing of goods primarily pertinent to the CHIPS Act relative to those pertinent to the IRA (though this split is imperfect, since photovoltaic cell manufacturing falls under NAICS 334). From what we can glean from trade association data, semiconductor manufacturing employs ten times as many people as the photovoltaic cell manufacturing sector in the US, without being any less capital intensive, therefore it’s reasonable to infer that semiconductor production accounts for a significantly higher proportion of the NAICS 334 growth. Following from that, another reasonable inference that most of the Computer/Electronic/Electrical construction spending was likely concentrated in the NAICS 334 Computer and Electronic product segment, relative to NAICS 335.
The data suggests that investment in semiconductor manufacturing structures outpaced both IRA-sensitive categories and the broader ecosystem. Based on total capital expenditures reported in the 2021 and 2022 ACES, structures capex for computer and electronic product manufacturing increased by 39%, adding up to a $3.3B gain. Structures capex within the more IRA-sensitive NAICS 335 manufacturing subsector grew by an impressive 72% from 2021 to 2022, but because growth in NAICS 335 structures capital expenditures materialized from a lower base, it only translated to a $528M gain, roughly a sixth of the additional structures capital spending in the CHIPS-sensitive NAICS 334 manufacturing subsector. These categories outperform the entire manufacturing sector, which saw 11.5% growth in structures capital spending.
Analysis of spending by census division shows policy effects
From the twelve months ending December 2019 to the twelve months ending October 2025, total manufacturing construction spending rose from $80.5 billion to $224.2 billion — an increase of $143.6 billion.6 The regional concentration of the manufacturing construction increase is even more striking.
The Mountain census division — encompassing Arizona, where TSMC and Intel (among the largest CHIPS award recipients) have committed to major fabrication facilities, as well as Idaho (Micron), Utah (TI), and Colorado (Microchip, Entegris) — accounts for $41.5 billion of this increase, or 28.9% of the national gain. For a census division that represented just 6.5% of national manufacturing construction, the past six years have been transformational. The division now represents nearly 21% of all construction spending on manufacturing facilities, and represents nearly 30% of the gain in manufacturing construction since 2019. The Mountain division is not a legacy manufacturing region, and its outsized contribution to the construction boom is strongly attributable to semiconductor megaprojects that were explicitly positioned to benefit from CHIPS Act awards.
Three other regions saw noteworthy manufacturing construction spending booms over this same period:
The South Atlantic division accounts for $37.8 billion (26%), but the region also benefited from a battery- and EV-related investment alongside CHIPS-supported projects in North Carolina, Virginia, and Georgia.
The West South Central division — predominantly Texas, home to Samsung, Texas Instruments, GlobalWafers, and other CHIPS recipients — contributed $22.1 billion (15.4%).
The East North Central division, where Intel’s $28 billion Ohio campus and SK Hynix’s Indiana packaging facility are located, added $24.6 billion (17.2%).
These four census divisions account for 88% of the national increase in manufacturing construction spending since 2019. The remaining five divisions — including the heavily industrialized Middle Atlantic and New England regions — contributed almost nothing to the aggregate gain, and the Northeast, as a whole, actually shows a decline. Taking into account planned CHIPS-funded developments in New York, we should soon see some uplift in the Middle Atlantic’s construction spending numbers.
Manufacturing construction spending by census division (trailing 12-month sums, billions). The Mountain, South Atlantic, West South Central, and East North Central divisions dominate the post-2021 increase.
Alignment between CHIPS awards and census data
Comparing CHIPS awards against actual Census Bureau construction spending gains by census division provides a useful, if imperfect, alignment check. The dollar value of CHIPS awards skews to a narrow set of census divisions, likely due to major megaprojects, and those divisions also constitute a disproportionate share of growth, suggesting policy impact on construction spending.7
The Mountain and West South Central divisions show the highest alignment between CHIPS awards and the broader manufacturing construction boom and the predominant boom in the Computer/Electronic/Electrical segment specifically. These two regions represent 44% of the growth in manufacturing construction spending since Calendar Year 2019 and were outsized recipients of CHIPS awards. TSMC, Intel, and Micron made major investments across Arizona, New Mexico, and Idaho, while Samsung made historic investments in Texas. While there may have been other investments of relevance in Texas, including Exxon and Chevron’s petrochemical facilities and Tesla’s gigafactory in Austin, the semiconductor manufacturing investments were likely a major cause of that spending growth in the Mountain census division.
As noted above, not all of the boom in manufacturing construction spending, or even in the manufacturing of Computer/Electronic/Electrical products, should be attributed to CHIPS. There are many regions, including the South Atlantic and East North Central, that saw a surge in manufacturing investment, but where CHIPS was unlikely to be the sole or even predominant driver.
The East North Central division was a substantial recipient of CHIPS Awards, most notably for the Intel facilities planned in Ohio. These facilities have faced ongoing delays, so while the region ranks highly in both manufacturing construction spending and relevant CHIPS awards, the policy effect is still relatively murky compared to other census divisions. This could possibly reflect the fact that CHIPS awards are not fully disbursed until the achievement of certain milestones.
The Pacific, West North Central, and East South Central divisions have seen some growth without any comparably significant CHIPS awards, but with other identifiable catalysts such as the advanced manufacturing investment tax credit, IRA-linked projects in the battery sector, and efforts to onshore pharmaceutical manufacturing. The South Atlantic division experienced a significant boom, representing 26% of growth over the past five years, the second highest of all the census divisions. That boom is tied to battery manufacturing that triggered construction spending very soon after IRA and CHIPS were enacted. In total, the regions with limited CHIPS awards make up 41% of the manufacturing construction spending boom.
An absence of CHIPS investment in a division corresponded to less growth in manufacturing facilities, providing marginal evidence in favor of a CHIPS policy effect. The Northeastern divisions (Middle Atlantic, New England) have not seen CHIPS awards for projects that commenced prior to 2025, and have seen no growth in manufacturing construction spending through this boom.
These geographic trends are likely to evolve over the coming years, and especially so if CHIPS has a pronounced effect. There are awards tied to Micron’s investments in New York where construction has only just begun. The performance of manufacturing construction spending in the Middle Atlantic division in the coming years will provide another opportunity to identify and analyze the effects of CHIPS investment, albeit against a different set of confounding variables such as tariffs or changes to tax treatment such as bonus depreciation.
Quantification of CHIPS effects
The skewed regional variation in CHIPS Awards and manufacturing construction spending, along with the predominance of the Computer/Electronic/Electrical segment, gives us a guide for benchmarking the potential size of CHIPS effects.
Relative to a static baseline of 2019 manufacturing construction spending, cumulative spending has outperformed by $433B as of the latest data through October 2025. In other words, relative to merely replicating the same level of spending and implied activity of 2019, the total additional dollars of spending devoted specifically to the construction of manufacturing facilities was $433B over the past 70 months. This approach accounts for some of the local cyclicality in construction spending without over-indexing on a local high watermark in construction spending, especially if only fleeting. While this cumulative estimate misses the role of rising inflation in construction costs, so long as the relative construction costs across manufacturing subsectors and US regions were roughly comparable, they should not materially affect the analysis.
The Computer/Electronic/Electrical segment makes up the vast majority of this $433B cumulative outperformance at roughly 76% (~$329B). The two census divisions where the nexus between CHIPS awards and construction spending are most apparent — Mountain and West South Central — represent 47% of the $433B cumulative increase in manufacturing construction spending, approximately $203B.8 Keep in mind that the top three divisions saw meaningful CHIPS awards but also saw manufacturing investments for other reasons. Meanwhile, other divisions with less significant CHIPS awards still saw meaningful upticks in manufacturing investment.
If we take the 47% spending share of the top two regions as a benchmark for a charitable estimate of plausible CHIPS-attributable spending, and then apply the national Computer/Electronic/Electrical share of 76% to account for the fact that not all construction in those regions was in CHIPS-relevant industries, we arrive at 47% × 76% ≈ 35%, or roughly $152B of the $433B total manufacturing construction spend. This gives us a soft negative inference: the direct policy effect from CHIPS alone was probably no greater than 35% of the cumulative outperformance in manufacturing construction spending. Other policies, including those under the IRA, likely contributed to the broader boom, and other market forces and state-level competitiveness considerations surely played some role in the scale and allocation of investment.
If CHIPS accounted for even a tenth of the increase in manufacturing construction spending over the past five years (~$43B), that would still exceed what Congress appropriated and what the CHIPS For America Fund allocated in financial assistance. As more data is released, we will better understand how awards translate into construction spending. More importantly, the construction activity tied to these projects is only the first layer of relevant economic output and return on these investments in semiconductor manufacturing. The full cost-benefit analysis of CHIPS must go well beyond an analysis of construction spending, but the early returns already suggest meaningful economic effects that helped to crowd in private capital expenditures in structures.
Considering the counterfactual
This analysis is not motivated by the question of whether the CHIPS Act was the sole cause of the manufacturing construction boom — it plainly was not. Post-COVID demand shifts, the Inflation Reduction Act, supply chain security concerns, and broader reshoring pressures may all have helped spur manufacturing investment. The question is how much of the observed surge would have materialized absent specific policy intervention. While none of the individual pieces of evidence is dispositive on its own, taken together they suggest a high likelihood of positive and economically meaningful policy effects.
The evidence examined here suggests that the counterfactual boom would have differed from what occurred in at least three respects. In scale, it would likely have been more modest: firms may have pursued incremental capacity expansions and brownfield investments rather than the greenfield megaprojects that dominate the construction spending data. In location, it is unlikely to have concentrated so heavily in the Mountain and West South Central divisions where CHIPS awards and megaprojects were so prominent. In composition, it would have been less dominated by the Computer/Electronic/Electrical segment.
The FEDS Note’s observation that planning surged before enactment is factually correct, but leaves open the question of whether the surge was in response to policy developments or in anticipation of them. While the former may be intuitive for skeptics of the CHIPS Act, the evidence is more consistent with firms treating construction planning as an option to be well-positioned in the event of policy enactment. For the timeline shown by the FEDS Note to invalidate strong policy effects, CHIPS’s influence must have only taken hold in August 2022 — an assumption that ignores the legislative history, sectoral skew, and geographic distribution of spending and CHIPS awards.
The more complete story is that policy expectations likely began shaping firm behavior well before enactment. Firms were willing to commit to planning expenses and even break ground for the option to scale up if legislation passed. The cumulative effect suggests that anticipated and enacted legislation catalyzed investment at historic scale and in locations that market forces alone cannot explain. The resulting construction boom bears the fingerprints of key industrial policies more clearly than a surface reading of the timeline might suggest.
Business fixed investment (BFI) consists of purchases of residential and nonresidential structures, equipment and intellectual property products.
Dodge Data & Analytics is a leading private sector provider of comprehensive construction planning and spending data.
An option premium is the upfront cost sacrificed to acquire the flexibility to take a future action. In the context of an insurance contract, the premium may be paying a modest monthly fee to ensure coverage in the event of an accident. In the context of a financial call option, it is the amount paid for the right to pay for a financial asset at a fixed price by a pre-specified date, even (and especially) if the market value of the asset appreciates substantially.
Seasonally adjusted annualized rates involve two transformations of the total current dollar expenditures spent at a monthly frequency. First, the data is multiplied by 12 to reflect the annualized rate associated with monthly spending. Then the data is adjusted for predictable month-to-month seasonality patterns in the series.
The numbers in ACES follow different definitions and concepts than the Census Bureau’s monthly estimates of construction spending, the “Value of Construction Put in Place.” ACES measures business capital expenditures on structures from the demand side (including new construction, renovations, and acquisitions of existing structures) at the moment of establishment, meaning it reflects when firms record investment rather than when physical construction occurs. Value of Construction Put in Place, by contrast, is a monthly supply-side measure tracking the dollar value of physical construction progress, including materials, labor, and related costs, at the project level, excluding purchases of existing structures.
This analysis relies on trailing twelve-month sums of non-seasonally-adjusted Census Bureau data to smooth monthly volatility and seasonality.
The mapping is imperfect: splitting CHIPS awards across census division lines introduces risk of estimation errors, and there are varying multipliers from CHIPS awards to total manufacturing construction spending, and varying construction timelines per award.
Including the East North Central division, the third largest for CHIPS awards, brings the share of attribution for cumulative additional manufacturing construction spending up to 65%, but both East North Central and West South Central saw other manufacturing phenomena beyond CHIPS-driven manufacturing.
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