WASHINGTON, July 27 (Reuters) – The U.S. Senate on Wednesday passed sweeping legislation to subsidize the nation’s semiconductor industry, hoping to boost the companies as they compete with China and ease a shortage persistent that has affected everything from cars, guns, washing machines and video. games
The House of Representatives plans to vote on the long-awaited bill Thursday after the Senate approved it on a bipartisan vote of 64 to 33. If it passes as expected, President Joe Biden plans to sign it into law law early next week.
The Chips and Science Act provides about $52 billion in government subsidies for US semiconductor production and an investment tax credit for chip plants estimated to be worth $24 billion.
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The legislation would also authorize more than $170 billion over five years to boost U.S. scientific research to better compete with China. Congress would still need to pass separate appropriations legislation to fund these investments.
“This legislation will create good-paying jobs, ease supply chains, help reduce costs and protect America’s national security interests,” said Senate Majority Leader Chuck Schumer.
Senator Mark Warner said the bill would help fund 10 to 15 new semiconductor factories. “If we hadn’t done this, there wouldn’t be another American semiconductor manufacturing plant ever built in this country,” Warner said.
Others noted that China had lobbied against the bill.
“This is a bad day for President Xi and the Chinese Communist Party,” said Senator John Cornyn. “The sleeping giant that is America has finally woken up to the challenge we face from the People’s Republic of China.”
The Chinese embassy in Washington said China was “strongly opposed” to the bill, which it said was “rooted in the Cold War and zero-sum game mentality and goes against the common aspiration of people from all walks of life in China and the United States to strengthen exchanges.” and cooperation”.
Most of the funding was earmarked for new factories that will take two to three years to build. Boeing Co ( BA.N ) said it still faces supply chain problems over chip shortages.
Workers work inside the clean room at U.S. semiconductor maker SkyWater Technology Inc, where computer chips are made, in Bloomington, Minnesota, U.S., April 2022, in this photo obtained by Reuters on July 19, 2022 .SkyWater Technology/Handout via REUTERS
On Tuesday, General Motors Co ( GM.N ) said it had more than 90,000 unfinished vehicles, mostly trucks and SUVs, waiting for chips and other parts. Thousands are parked in southeast Michigan.
Lawmakers said they would not normally support large subsidies for private companies, but noted that China and the European Union have been providing billions in incentives. They also cited risks to national security.
“What we became convinced of was that there was a real problem here,” said Sen. Maria Cantwell. “When we were faced with what really is a threat to America’s competitiveness, we responded. . . . There were people betting against us.”
MONTHS OF WORK
The enactment of the bill would come after more than a year of work. A more expansive version of the legislation passed the Senate with much fanfare in June 2021, but stalled in the House. That frustrated lawmakers in both parties who see competition with China and global supply chain issues as top priorities.
To spur Congress to action, Biden and other supporters of the bill framed the issue in terms of national security, saying it was essential to ensure American production of chips crucial to a wide range of consumer goods and military equipment .
Senator Mark Kelly said if the US lost access to chips made in Taiwan it could reduce US gross domestic product by 10% and cripple car production.
Biden urged the House to quickly pass the bill.
“As Americans worry about the state of the economy and the cost of living, the CHIPS bill is an answer: It will speed up semiconductor manufacturing in America, lowering prices for everything from cars to in dishwashers,” he said in a statement after the Senate vote.
Critics such as Senator Bernie Sanders – the only member of the Senate Democratic caucus to vote against the bill – have called the measure a “blank check” for highly profitable chipmakers.
Lawmakers are working on other provisions that could address other supply chain vulnerabilities.
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Reporting by Patricia Zengerle and David Shepardson; Editing by David Gregorio
Our standards: the Thomson Reuters Trust Principles.