Semiconductor Manufacturing Bill Passes Key Senate Vote

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After months and months of start-and-stop negotiations, the Senate voted on Tuesday to advance a $52 billion bill to boost domestic semiconductor production that lawmakers say is crucial to mitigate supply chain disruptions, enhance national security and increase competitiveness with China.


What do you want to know

  • The Senate voted Tuesday night to advance a $52 billion bill to boost domestic semiconductor production
  • The measure includes tens of billions of dollars to “build, expand or upgrade national facilities and equipment for semiconductor manufacturing, assembly, testing, advanced packaging or research and development.”
  • The bill also includes certain “safeguards,” including language that says federal funds cannot be used for stock buybacks, or to “build advanced semiconductor production facilities in countries that present a national security problem”, including China.
  • Biden administration officials had recently sounded the alarm over the long-stalled legislation, saying that if it is not passed quickly, there would be serious consequences for national security and the economy.

The measure, known as the CHIPS Act of 2022, contains $39 billion in financial assistance to “construct, expand or upgrade national facilities and equipment for manufacturing, assembly, testing, advanced packaging or research and development of semiconductors”. Of this figure, $6 billion can be used for loan guarantees or direct loans.

The bill cleared a major procedural hurdle on Tuesday night, advancing comfortably on a 64-34 vote.

An additional $11 billion will go to the Commerce Department for advanced research and development programs, $2 billion will go to the Pentagon for labor demands and national defense programs, $500 million will be used by the State Department to “support international information and communications technology.” Security and Semiconductor Supply Chain Activities,” and $200 million will be used for a national workforce and education fund.

The measure also includes certain “safeguards,” including language that states that federal funds cannot be used for stock buybacks, or to “build advanced semiconductor production facilities in countries that exhibit a national security issue”, including China.

The Senate passed its $250 billion United States Innovation and Competition Act, or USICA, in June 2021 by a vote of 68 to 32. The bill includes $52 billion to incentivize more companies to build factories in the United States. In February, the House approved its own version, called the America Competes Act – a $350 billion plan. This legislation was passed largely along party lines. Both bills aim to make the United States more competitive with China and strengthen domestic supply chains by investing in the chip industry.

Senate and House lawmakers negotiated compromise legislation as their bills differ on how to improve research and development, expedite visas for qualified foreign citizens and protect U.S. research from foreign interference.

The Biden administration and other key lawmakers have indicated they would support a scaled-down version of the measure that only bolsters semiconductor manufacturing, with the preference to approve it more urgently and move from other parts of the bill later.

“There are several pieces of the broader legislation that are important, and I am committed to doing whatever it takes to get them across the finish line at this Congress,” the Commerce Secretary wrote. , Gina Raimondo, in a press release. “But chip funding is the only part of this bill we need to pass now to avoid facing devastating consequences.”

After Tuesday’s vote, Senate Majority Leader Chuck Schumer, DN.Y., tabled a bipartisan amendment that would include tens of billions of dollars in funding for the Commerce Department, the National Science Foundation and other agencies.

Schumer, one of the bill’s biggest supporters, said Tuesday that he expects many of the provisions left out of the reduced bill to be brought up again at a later date.

“There are a lot of things Republicans and Democrats want in the eventual bill that won’t be in this bill, even if the science is included,” he said, adding that there are will have a “bipartisan desire” to strike a deal.

If the bill passes the Senate, the House is expected to take up the measure and send it to President Joe Biden’s office.

In a letter to fellow Democrats WednesdayHouse Speaker Nancy Pelosi, D-Calif., hailed Tuesday’s vote as “significant progress” on the measure, which she called “a bold, bipartisan package that will cut costs for families here at home while reviving America’s competitiveness on the world stage.” ”

Pelosi said passage of the bill is an “economic necessity to reduce costs for consumers” and “a national security imperative as we seek to reduce our dependence on foreign manufacturers.”

“The Chips Act for America is a major victory for American families and the American economy,” Pelosi wrote. “As the Senate follows its legislative process, we are optimistic that the House will be able to consider this bill as early as next week.”

Biden administration officials had recently sounded the alarm over the long-stalled legislation, saying that if not passed quickly, there would be dire consequences for national security and the economy – including the risk of losing a number of multi-billion dollar national projects. investments.

Intel CEO Patrick Gelsinger said last week he could delay development of a $20 billion semiconductor fab in Ohio if Congress doesn’t approve billions soon. dollars in subsidies for his industry.

In an interview with Washington Post Live last week, Gelsinger said he would “make the decision to delay our project in Ohio if ‘a flea subsidy bill’ does not pass.”

“There are real-time consequences if this doesn’t pass,” he said.

Similarly, Commerce Secretary Raimondo told CNBC last month that Taiwan-based semiconductor company GlobalWafers may not go ahead with plans to build a factory in Sherman, Texas. if Congress does not approve the incentives for the production of chips.

“This investment that they’re making is contingent on Congress passing” the funding, she said. “The CEO told me so herself.”

Sanjay Mehrotra, president and CEO of Micron, a computer memory and data storage company, told Fox News on Monday that public funding was needed to level the playing field with countries whose governments have invested heavily. in semiconductor manufacturing for over 20 years.

The United States’ share of the global chip manufacturing market has fallen from 37% in 1990 to 12% today, according to the Semiconductor Industry Association.

“We need to get it (the legislation) across the finish line for jobs, for the resilient domestic supply chain here in the United States and, of course, at the same time (for) economic security, but also national security,” Mehrotra said.

In an interview with Spectrum News last week, Cecilia Rouse, chairwoman of the White House Council of Economic Advisers, said the bills were very important for increasing the economic capacity of the United States.

“They are going to help us make our economy more productive, which helps us meet challenges like Russia’s war against Ukraine, defies such inflation,” she said. “It helps us address those policies and deal with those challenges and maintain economic health in the future as well. We therefore call on Congress to do the right thing.

“At the end of the day, there are very real and very devastating consequences if Congress doesn’t do its job in the month of July,” Raimondo said in an interview with The Associated Press.

Ryan Chatelain and Austin Landis of Spectrum News contributed to this report.

The Associated Press contributed to this report.

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