$52B CHIPS Act a boon for construction, but challenges remain

By Sebastian Obando | Originally posted on constructiondive.com

The White House announced Wednesday President Joe Biden will sign the $52 billion CHIPS Act, which subsidizes the semiconductor industry and provides a 25% tax credit for companies that build facilities in the U.S., on August 9.

Platitudes from construction pros started piling in as soon as Congress passed the bill last week.

Richard Branch, chief economist for Dodge Data & Analytics, said the CHIPS Act will “keep the construction sector on sure footing as the economy slows over the next year.” He added Dodge is currently tracking nearly $33 billion in semiconductor fabrication plants still in the planning stages.

James Christianson, vice president of government relations at the Associated General Contractors of America, said the act will “spur broader economic development and new, long-term construction jobs,” in a letter praising the passage of the CHIPS Act.

Despite those accolades, challenges remain.

Labor shortage

For example, there are a limited number of specialty contractors with the skill and experience in the semiconductor space, said Jeffrey Gilmore, chair of Akerman’s construction practice, a law firm based in Miami.

“The current demand and shortage of skilled labor will present a substantial challenge for the teams selected to perform such projects,” said Gilmore. “Ultimately, successful project delivery will demand a nimble team prepared to perform very specialized design and construction services suited to the clean building environment necessary for a precision industrial chip facility.”

The pace and complexity of such projects will present additional challenges. These jobs typically require progressive design-build and engineering, procurement and construction approaches, Gilmore said, as well as heightened security.

“Access to a workforce with security clearances will likely provide a further complication that may limit the pool of qualified candidates,” said Gilmore. “Access to federal funds will also likely entail a unique set of compliance issues to address relevant requirements that will be mandated as a condition of the funding.”

Davis-Bacon questions

Peter Comstock, senior director of legislative affairs at Associated Builders and Contractors, also raised concerns about how Davis-Bacon regulations, which set prevailing wages on federal projects, will be included on private construction jobs.