CHIPS Act Child Care Requirements: A Step-by-Step Guide for Semiconductor Manufacturers, Suppliers and Contractors (Updated January 2024)

The CHIPS Act, which stands for Creating Helpful Incentives to Produce Semiconductors, is a $39 billion investment in the semiconductor industry, aimed at increasing domestic production and reducing dependence on foreign suppliers.

One of the key requirements for semiconductor manufacturers applying for CHIPS Act funding is the provision of affordable Child Care for their workers. This step-by-step guide is designed to help semiconductor manufacturers navigate the Child Care requirements of the CHIPS Act. It will provide an overview of the requirements, explain how to apply for funding, and offer tips for complying with the regulations. By following this guide, semiconductor companies can ensure that they are meeting the requirements of the CHIPS Act and supporting their workers and families.

Overview of the CHIPS Act
The CHIPS for America Act was first introduced by U.S. Congressman Michael McCaul (R-Texas), in 2020 alongside Representative Doris Matsui (D-Calif.) and Senators John Cornyn (R-Texas) and Mark Warner (D-Va.). The bill was signed into law in August of 2022 and provides funding for the development and production of semiconductors, with the goal of reducing the country’s dependence on foreign manufacturers which has been identified as a national security risk. While the funding is primarily aimed at increasing production, a portion of it is also allocated to research and development in the industry. See Fact Sheet: CHIPS Program Funding Opportunity.

The CHIPS Act also includes tax incentives for semiconductor manufacturers to invest in the construction of new semiconductor fabrication facilities, or fabs, within the United States as well as establishing the CHIPS for America International Technology Security and Innovation Fund, which provides grants and other incentives to semiconductor manufacturers.

One of the six priorities outline for the program is Workforce Development. Applicants must commit to developing and sustaining a highly trained, diverse workforce, especially by explaining their hiring strategies for people from economically disadvantaged backgrounds. In order to satisfy the needs of the semiconductor industry in their area, applicants are also urged to collaborate with governmental agencies, educational institutions, labor unions, industry groups, and other strategic partners. Finally, any application seeking more than $150 million in funding must outline a strategy for providing facility and construction workers with access to quality, dependable, affordable child care. See Fact Sheet: Building a Skilled and Diverse Workforce.

A key provision of the CHIPS Act is the Child Care requirement, mandating companies receiving funding to provide affordable Child Care. The requirement is designed to support the semiconductor industry by addressing the shortage of skilled workers, help increase retention, and encourage more women to enter the field. which are crucial for the industry’s growth and success.

While some companies may already offer of Child Care support to their employees, the CHIPS Act requirements are more specific and extensive. In order to tap into the funding provided by the act, companies must meet certain criteria when it comes to Child Care, including affordability and accessibility.

Child Care Requirements under the CHIPS Act

The Child Care requirements under the CHIPS Act are outlined by the Commerce Department. Companies seeking CHIPS funding will be required to submit workforce development plans for the workers who will operate their facilities and the workers who will build them, including plans to meet the Department of Commerce’s and the Department of Labor’s Good Jobs Principles. Applicants requesting over $150 million in direct funding must also submit plans to provide both their facility and construction workers with access to affordable, accessible, reliable, and high-quality child care. See Fact Sheet: Building a Skilled and Diverse Workforce.

The Child Care requirement is flexible and allows companies to choose the type of Child Care services that best suit their needs. Companies can choose to provide on-site Child Care facilities, partner with local Child Care providers, or offer other types of Child Care assistance. The CHIPS Act also provides funding to help companies establish and maintain Child Care programs.

Under the CHIPS Act, semiconductor companies applying for more than $150 million in federal funding must provide a Child Care plan that meets specific requirements. Companies applying for less than $150 million are very strongly encouraged to provide access to child care. Here are the key requirements:

• Affordable, accessible, reliable, and high quality. Child care should be within reach for low- and medium-income households, be located at a convenient location with hours that meet workers’ needs, grant workers confidence that they will not need to miss work for unexpected child care issues, and provide a safe and healthy environment that families can trust.
• Responsive to workers’ needs. The CHIPS Program Office recognizes that care needs will vary across communities and employers. It expects applicants to devise solutions that are responsive to their workers’ needs, such as providing access at extended hours and addressing both supply and demand
  constraints in their communities. In addition, the CHIPS Program Office encourages applicants to craft access to child care plans in tandem with community stakeholders, including state and local governments and local groups with expertise administering child care.

Overall, the new Child Care requirements represent a significant shift in how the semiconductor industry operates. While it may take some time for companies to adjust, the long-term benefits for both workers and the industry as a whole could be substantial.

The Need for Child Care: An Integral Part of the Business Support Infrastructure

Commerce Secretary Gina Raimondo stated, “Here’s the truth: CHIPS won’t be successful unless we expand the labor force. We can’t do that without affordable child care.” The child care crisis was already impacting the U.S. economy prior to the pandemic. A 2018 ReadyNation study found that it was costing $57 billion annually in lost earnings, productivity, and revenue. In February 2023, ReadyNation’s updated study found that the impact on families, businesses, and taxpayers has more than doubled to $122 billion each year.

The strain is being felt by parents – especially moms – who must choose between work and family. But it is also impacting employers through lost productivity. According to the ReadyNation study, “Almost two-thirds of parents of infants and toddlers facing child care struggles reported being late for work or leaving work early, and more than half reported being distracted at work or missing full days of work. An overwhelming 85% of primary caregivers said problems with child care hurt their efforts or time commitment at work.”

The core causes of a lack of child care won’t be resolved without aggressive measures to improve access and affordability. That starts with improving the quality and pay of providers. Child care providers are among the lowest-paid professionals in the nation and are rarely benefits like health insurance or retirement income. Their average pay of early childhood educators is less than parking lot attendants. However, increasing the cost of child care to pay providers more is a challenge when parents are already struggling to afford care.

Across the country, the cost of center-based child care is higher than the cost of in-state tuition at a public four-year university. The U.S. Department of Health and Human Services defines affordable child care as costing less than 7 percent of income, however, more than half of families spend 20% or their income or more on child care.

The child care requirements in the CHIPS Act rules allow semiconductor companies with flexibility for strategies to resolve the issue – not only for their own facilities but by within the communities where their employees live.

Step-by-Step Guide for Semiconductor Manufacturers

As per the requirements of the CHIPS Act, semiconductor manufacturers who wish to qualify for federal subsidies must provide affordable, high-quality Child Care for their workers. Here is a step-by-step guide to help semiconductor manufacturers meet the Child Care requirements:

1. Assess Your Current Child Care Offerings: Start by evaluating your current Child Care offerings, if any. Determine if your current offerings meet the CHIPS Act requirements, and if not, identify areas for improvement.
2. Develop a Child Care Plan: Develop a Child Care plan that meets the CHIPS Act requirements. This plan should include details on the type of Child Care you will offer, the cost to employees, and how you will ensure the quality of care.
3. Submit Your Child Care Plan: Submit your Child Care plan to the Department of Commerce for approval. Your plan should include details on how you will ensure that Child Care is affordable, high-quality, and accessible to your employees.
4. Implement Your Child Care Plan: Once your Child Care plan is approved, implement it. Ensure that all employees are aware of the Child Care options available to them and how to access them.
5. Monitor and Evaluate Your Child Care Offerings: Continuously monitor and evaluate your Child Care offerings to ensure that they meet the CHIPS Act requirements. Make any necessary adjustments to your plan to ensure that it remains compliant.

The Child Care requirement is an essential component of the CHIPS Act. By providing Child Care services for their employees, semiconductor companies can attract and retain a highly skilled workforce. This, in turn, can lead to increased productivity, reduced absenteeism, and improved employee morale.

Compliance Strategies for Manufacturers

Here are some additional strategies that semiconductor manufacturers can use to ensure compliance:

• Partner with local Child Care providers to offer employees affordable Child Care options (see how TOOTRiS can make this seamless).
• Offer on-site Child Care facilities for employees.
• Provide Child Care subsidies to employees.
• Offer flexible work arrangements, such as telecommuting or flexible schedules, to help employees balance work and Child Care responsibilities.
• Consult with legal and human resources experts to ensure compliance with all applicable laws and regulations.

Manufacturers should also be prepared to provide documentation and evidence of their compliance with the Child Care requirements when applying for federal funding. This may include:

• Documentation of partnerships with local Child Care providers.
• Proof of on-site Child Care e facilities, including licensing and certification documents.
• Records of Child Care subsidies provided to employees.
• Documentation of flexible work arrangements offered to employees.
• Legal and human resources compliance reports.

Implementing these strategies and maintaining detailed records of compliance efforts, will ensure semiconductor manufacturers meet the Child Care requirements set forth by the Commerce Department and qualify for federal funding.

What Leaders Had to Say

• “We need chip manufacturers, construction companies and unions to work with us toward the national goal of hiring and training another million women in construction over the next decade to meet the demand not just in chips, but other industries and infrastructure projects as well.” – Commerce Secretary Gina Raimondo (FORTUNE)
• “None of this bothers us. We want to create an environment that is very enticing, where we’re going to grow the talent.” – Intel’s chief global operations officer Keyvan Esfarjani (IPR)
• “We’re not doing this for the sake of putting points on the board for child care policy, but we are acknowledging that when you look at the labor market right now, one of the largest factors keeping people out of the labor market is caregiving responsibilities.” – Caitlin Legacki, senior adviser at the Commerce Department (AXIOS)

• “This new policy is an opportunity to combine public and private dollars to build the supply of affordable, accessible, reliable and high-quality child care. When families have access to child care, our whole economy benefits. We see this as an opportunity to pilot innovative programs that will allow parents to confidently enter – and remain in – the workforce.” – CCAoA Interim CEO Michelle McCready (ChildCare Aware)
• “It is important to understand Commerce’s guidance on requiring semiconductor companies seeking CHIPS funding to provide workers access to childcare in this context. It is not, as some have wrongly argued, an issue of social policy. It is a pragmatic move, clearly aligned with the nation’s security interests, to grow the workforce necessary to get the fabs built and producing the chips on which our country runs. In past crises, we relied heavily on women to augment the nation’s workforce. In today’s world, reliable and affordable childcare is a valuable step forward to a more numerous, more diverse, and more effective high-tech workforce.” – Center for Strategic & International Studies (CSIS)
• “This industry is starved for female talent. About 20% of our industry have jobs occupied by females so to me that’s a huge lever for us as a country as we try to bring back semiconductor manufacturing.” – Thomas Sonderman, CEO of SkyWater Technology (CNBC)
• “The CHIPS Act Child Care Requirements are a step in the right direction to ensure that children receive high-quality care while their parents are at work. It’s an important, commonsense step that recognizes a really basic reality: you can’t bring back manufacturing in America without workers – and those workers need child care.” – Senator Patty Murray (USA Today)
• “So it’s welcome news that the Biden administration is seeking creative ways to make things just a little bit easier for working parents. On Tuesday, the administration announced that to qualify for federal subsidies under the Chips Act, semiconductor manufacturers will have to guarantee affordable, high-quality child care for workers …. The economy grows when more people enter the labor force. And a lack of things like affordable child care, paid parental leave and universal pre-kindergarten have for years discouraged workers — especially women — from contributing to their full capacity. That’s a drag on the economy as a whole, but Congress has lacked the will to do much about it. It isn’t just would-be working parents who suffer. It’s employers, too, when they struggle to hire or retain workers.” – Sarah Green Carmichael, Opinion Editor at Bloomberg (Bloomberg)
• “Lack of childcare is a significant barrier to labor force participation. Policies like these have the potential to increase the pool of available workers, a win for our economy.” – Joseph Stiglitz, Economics Professor at Columbia University (Tweet)
• “This new policy is an opportunity to combine public and private dollars to build the supply of affordable, accessible, reliable and high-quality child care. When families have access to child care, our whole economy benefits. We see this as an opportunity to pilot innovative programs that will allow parents to confidently enter – and remain in – the workforce.” – Michelle McCready CCAoA Interim CEO
• “That’s all hugely important both from a labor and workers’ rights perspective and, more broadly, for American industry. Child care is prohibitively expensive for many workers, especially for lower-income workers who sometimes have to choose between missing shifts or making sure their children are safe. Even before the pandemic, parents who could afford child care were often finding that there weren’t enough child care options available … The lack of affordable child care is a drag on business owners as well. ‘Half of all workers and nearly 60% of parents cite lack of childcare as their reason for leaving the workforce,’ a U.S. Chamber of Commerce report found last year. In this tight labor market, you’d assume that companies want all the help they can get to recruit and retain workers.” – Hayes Brown, Opinion Writer/Editor at MSNBC (MSNBC)
• “Need workers? You need child care.” – Kathryn Anne Edwards, Economist at RAND Corporation (Tweet)

Who are the CHIPS for America Leaders and Staff

The U.S. Department of Commerce provided a list of the leaders and staff joining the CHIPS for America team. They will be implementing the CHIPS Act investments in the semiconductor industry. They will serve in the CHIPS Program Office, which is housed within the Department of Commerce’s National Institute of Standards and Technology (NIST).

“We are building a team of experienced experts who will ensure CHIPS for America spurs manufacturing and innovation and revitalizes our domestic semiconductor industry, while being good stewards of taxpayer dollars,” said Secretary of Commerce Gina M. Raimondo. “This group of accomplished leaders brings the diversity of experience, ideas, and backgrounds needed to secure our position as the global leader in semiconductor manufacturing and R&D for decades to come.”

The new CHIPS for America staff within the CHIPS Program Office are:

• Rebecca Callahan, Director of Legislative Affairs
• Morgan Dwyer, Chief Strategy Officer
• Adrienne Elrod, Director of External and Government Affairs
• Todd Fisher, Chief Investment Officer
• Matt Hill, Communications Director
• Dan Kim, Chief Economist and Director of Strategic Planning and Industry Analysis
• Brad Koenig, Senior Relationship Director
• Andy Kuritzkes, Chief Risk Officer
• Atissa Ladjevardian, Chief of Staff for External and Government Affairs
• Nikita Lalwani, Senior Advisor to the Director
• Sara Meyers, Chief Operating Officer & Chief of Staff
• Mike O’Brien, Senior Relationship Director
• Sara O’Rourke, Head of Operations and Chief of Staff to the Chief Investment Officer
• Kylie Patterson, Senior Advisor for Opportunity and Inclusion
• Fayrouz Saad, Director of Public Engagement

CHIPS Act Application Process

To apply for CHIPS Act program funding, there is a five-part process. See Fact Sheet: CHIPS Program Funding Opportunity for more details.

1. Statement of Interest. Applicants must describe the proposed project so that the CHIPS Program Office may determine interest in the program and plan for further review.
2. Pre-Application (Optional). Potential applicants have the option to submit a more detailed description of their project plan(s). The CHIPS Program Office will provide written feedback, including recommendations for next steps (i.e., whether the applicant should submit a revised pre-application, a full application, or neither).
3. Full Application. Full applications need to contain detailed information on the project(s), including the technical and financial feasibility and alignment with economic and national security objectives. The CHIPS Program Office may either provide feedback or request further information. Before moving into the due diligence phase, the CHIPS Program Office will prepare and seek agreement to a non-binding Preliminary Memorandum of Terms, which will include recommendations for the award’s amount and form and may also include terms related to other strategic objectives.
4. Due Diligence. If the CHIPS Program Office determines an applicant is likely to receive an award, the application will enter the comprehensive due diligence phase. During this phase, the CHIPS Program Office will require the applicant to provide additional information on national security, financial, environmental, and other issues and will engage at the applicant’s expense with outside advisors, consultants, and/or attorneys to validate the information provided in the application.
5. Award Preparation and Issuance. After successfully completing due diligence, the Department of Commerce will prepare and issue an award. Direct funding and loans will ultimately be disbursed in tranches tied to project milestones.

Early Impact

Since the introduction of the CHIPS for America Act in 2020, several semiconductor companies and supply chain suppliers have announced announcements investments  in the US.

Before the act passed, the following investments were announced:

• In July 2021, GlobalFoundries announced plans to build a new $1 billion semiconductor fabrication plant in Upstate New York. (press release)
• In November 2021, Samsung announced plans to build a $17 billion semiconductor factory to begin operations in the second half of 2024. It is the largest foreign direct investment ever in the state of Texas. (NPR)
• In January 2022, Intel announced an initial $20 billion investment that will generate 3,000 jobs, making it the largest investment in Ohio’s history, with plans to grow to $100 billion investment in eight total fabrication plants. (CNBC)
• In May 2022, Purdue University launched the nation’s first comprehensive semiconductor degrees program in anticipation of the overwhelming need for 50,000 trained semiconductor engineers in the United States to meet the rapidly growing demand in anticipation of the CHIPS Act.
• In May 2022, Texas Instruments broke ground on new 300-mm semiconductor wafer fabrication plants in Sherman, Texas, and projected its investments will reach $30 billion and create as many as 3,000 jobs. (Semiconductor Digest)
• In July 2022, SkyWater announced plans to build an advanced $1.8 billion semiconductor manufacturing facility in partnership with the state government of Indiana and Purdue University to pursue CHIPS funding. (Reuters)

After the CHIPS and Science Act passed, the following investments were announced:

• In October 2022, Micron Technology announced it will invest $20 billion in a new chip factory in Clay, New York, to take advantages of the subsidies in the act and signaled it could expand its investments to $100 billion over 20 years. (Washington Post)
• In December 2022, TSMC announced the opening of the company’s second chip plant in Arizona, raising its investments in the state from $12 billion to $40 billion. (CNBC)
• In February 2023, Integra Technologies announced a $1.8 billion investment in a new Outsourced Semiconductor Assembly and Test (OSAT) operation in Wichita, Kansas. (Kansas Commerce)
• In February 2023, Texas Instruments announced an $11 billion investment in a new 300-mm wafer fab in Lehi, Utah. (Utah.gov)
• In February 2023, EMP Shield announced a $1.9 billion investment in a new campus in Burlington, Kansas. (Kansas Commerce)

The Top 20 Semiconductor Companies in the World for 2023

Here is a list of the top players in the semiconductor supply chain.

1. Taiwan Semiconductor Manufacturing Co. (TSMC)
2. SK Hynic Inc
3. Broadcom Corporation
4. Qualcomm
5. Applied Materials
6. Nvidia Corporation
7. Texas Instruments Inc.
8. Intel
9. Samsung Electronics
10. Micron Technology
11. AMI Semiconductor
12. Advanced Semiconductor Engineering
13. ARM
14. Atmel
15. Cosmic Circuits
16. AMD
17. Analog Devices
18. Applied Materials
19. Freescale Semiconductor
20. Apple

Frequently Asked Questions About the CHIPS Act Child Care Requirement

What are the requirements for child care under the CHIPS Act?
The CHIPS Act requires semiconductor manufacturers who apply for more than $150 million in subsidies to provide child care services that are within reach for low- and medium-income households. This requirement aims to help parents, especially mothers, enter or remain in the workforce by providing access to affordable child care services.

What is the timeline for compliance with the CHIPS Act Child Care Requirement?
The timeline for compliance with the CHIPS Act Child Care Requirement varies depending on the size of the company and the amount of federal funding received. Companies with fewer than 25 employees are exempt from the requirement, while companies with 25 to 99 employees have until January 1, 2026, to comply. Companies with 100 or more employees have until January 1, 2024, to comply. It’s important to note that compliance with the CHIPS Act Child Care Requirement is not optional.

What are the consequences of non-compliance with the CHIPS Act Child Care Requirement?
Failure to comply with the child care requirement could result in the rejection of the application or the revocation of the funding. The Commerce Department is responsible for enforcing the requirement and ensuring that companies meet the criteria. If a company fails to meet the child care requirement, it may face legal consequences, including fines or penalties. In addition, non-compliance could result in damage to the reputation for the company, as it may be viewed as not supporting the well-being of its employees.

What are the exemptions to the CHIPS Act Child Care Requirement?
According to the Commerce Department, companies that are applying for less than $150 million in CHIPS funding are exempt from the child care requirement. Additionally, companies that can demonstrate that they already provide child care benefits to their employees that meet the standards set forth in the CHIPS Act may also be exempt. It’s important to note that even if a company is exempt from the child care requirement, they may still choose to provide child care benefits in order to attract and retain top talent.

What are the potential benefits of the CHIPS Act Child Care Requirement?
The CHIPS Act Child Care Requirement has the potential to provide several benefits to both semiconductor manufacturers and their employees. Here are a few potential benefits:

• Increased productivity: Access to affordable and high-quality child care can help employees focus on their work and be more productive, which can ultimately benefit semiconductor manufacturers.
• Reduced absenteeism: When employees have reliable child care, they are less likely to miss work due to child care issues, which can reduce absenteeism and improve productivity.
• Improved employee retention: Offering child care benefits can help semiconductor manufacturers attract and retain talented employees, particularly women who may be more likely to leave the workforce due to child care responsibilities.
• Increased workforce participation: By providing access to affordable and high-quality child care, the CHIPS Act Child Care Requirement can help more parents participate in the workforce.

It is important to note that the effectiveness of the requirement will depend on how it is implemented and whether it is accompanied by other supportive policies and programs.

What are some common misconceptions about the CHIPS Act Child Care Requirement?
As with any new legislation, there may be misconceptions about what the CHIPS Act Child Care Requirement entails. Here are a few common misconceptions:

• Misconception 1: The CHIPS Act only applies to companies in the tech industry. While the CHIPS Act is primarily focused on increasing funding for semiconductor manufacturing, the Child Care Requirement applies to all companies receiving funding with over 50 employees. This means that the requirement applies to companies in all industries, including construction, not just the tech industry.
• Misconception 2: The CHIPS Act only requires companies to provide child care for their employees’ children. The Child Care Requirement actually allows companies to choose how they want to comply with the law. They can either provide child care services directly to their employees, or they can contribute to a fund that provides child care services to the broader community. This means that the Child Care Requirement is not just about providing child care for employees’ children, but also about supporting local economies.
• Misconception 3: The CHIPS Act Child Care Requirement is a burden on small businesses. The requirement does apply to small businesses with over 50 employees, but it also includes provisions to help them comply. For example, the law provides tax credits to small businesses that provide child care services to their employees, or they can choose to contribute to a fund that provides child care services to the communities where their employees live.

A Necessary Step to Bolster the Semiconductor Industry

Overall, the Child Care requirements under the CHIPS Act are a significant step towards improving the lives of semiconductor workers and their families, and bolstering the industry at a time when labor markets are historically tight. By providing affordable Child Care, semiconductor manufacturers can attract more workers – especially women – and support their existing workforce, which is essential for the growth of the semiconductor industry in the United States.

Schedule a demo to discover how turn-key TOOTRiS Child Care Benefits help semiconductor companies meet CHIPS Act requirements comply with zero admin.