The 2022 CHIPS and Science Act was the United States’ most ambitious foray into industrial policy in more than half a century. The bill included roughly $50 billion to revitalize the U.S. semiconductor industry, which had been hollowed out over decades as manufacturing migrated overseas. Industrial policy, long eschewed in policy circles, had come back in vogue as a way to strengthen supply chain resilience for industries critical to economic and national security. Moving the legislation through Congress required a multiyear process that involved lengthy negotiations and complex maneuvering. But passing the law was just the beginning. As soon as it was signed, the action moved from Congress to the Department of Commerce, which had to figure out, quickly and with little room for error, how to stand up a new office and infrastructure to deliver on its aims.

Washington was out of practice when it came to industrial policy, which the United States had largely abandoned since the Cold War. So there was no playbook available to the new CHIPS Program Office, which was established to administer the bill’s $39 billion in semiconductor manufacturing incentives (another $11 billion or so was for semiconductor-related research and development). Where possible, the office drew lessons from past large-scale grant and loan initiatives, such as the 2008 Troubled Asset Relief Program; the 2009 Presidential Task Force on the Auto Industry, which bailed out automakers; and the Department of Energy’s Loan Programs Office, which has financed more than $40 billion in clean energy and advanced transportation projects. But much of the time, the program was building the plane as it flew.

It’s too early to pass a final judgment on how well it did: the semiconductor industry is fast-moving and cyclical, and many projects are just getting underway. But the program has made real progress. In two and a half years, it has unlocked more than $450 billion in private investments, helped support the construction of 17 new semiconductor fabrication plants (known as fabs), and made the United States the only country to secure manufacturing commitments from the world’s five leading chip manufacturers. When the CHIPS Act was passed, the United States produced none of the most advanced logic or memory chips, the hardware used in smartphones, laptops, and powerful AI systems; it is now projected to produce 20 percent of the world’s leading-edge logic chips by 2030 and ten percent of its dynamic random-access memory chips by 2035.

CHIPS set itself up for success in part thanks to clever statutory drafting and early choices on hiring, goal setting, and structure. Amid bipartisan consensus to expand industrial strategy beyond CHIPS, future programs would do well to learn from its example. Of course, there is no one way to do industrial policy, and the details will vary by sector and circumstance, but one constant is that large federal programs require the government to work quickly, efficiently, and well. That requires establishing nimble and dynamic teams with sophisticated expertise; building productive and transparent relationships with industry, other governments, and the general public; and figuring out how to overcome sources of delay—within government and outside it—that make it hard to build new things. Most important, industrial policy requires clarity of purpose: a concrete set of specific objectives to guide investments and against which to measure success.

The first days of any new program are when the most critical decisions are made. For CHIPS, having a director that did not require Senate confirmation was an early advantage, since it meant that Michael Schmidt—whom Commerce Secretary Gina Raimondo tapped to head the office—was able to get working right away. Requiring a Senate-confirmed leader for an industrial policy program would, in most cases, be a mistake: confirmation takes a long time and can dissuade people from taking on the role. During the Biden administration, confirmations took an average of 192 days from official submission—nearly three times as long as they took under President Ronald Reagan. That is time an industrial policy program cannot afford to waste.

Most government programs take months to get off the ground. In its first few months, however, the CHIPS team released its first funding opportunity for commercial chip fabs, published an investments strategy paper, and hired dozens of staff across investments, strategy, legal, and external affairs. Raimondo also appointed a chief investment officer with private-sector investment experience and credibility with large industry players to work with Schmidt. Hiring from the private sector was essential for an industrial policy program intended to go toe to toe with some of the biggest, most sophisticated companies in the world. At the same time, the point of industrial policy is to meet economic and national security objectives, not just earn market returns. So the CHIPS team also needed staff that could evaluate deals based not just on financial terms but also by judging whether they would improve supply chain resilience, meet the needs of the defense........

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