Senate passes bill to subsidize US-made semiconductor chips
The Washington Post July 27, 2022
The Senate passed a bipartisan bill Wednesday that would provide $52 billion in subsidies to domestic semiconductor manufacturers, and invest billions in science and technology innovation, in a bid to strengthen the United States’ competitiveness and self-reliance in what is seen as a keystone industry for economic and national security.
In a 64-33 vote, the Senate passed the $280 billion “CHIPS and Science Act,” the final iteration of a bill that was years in the making. About $52 billion would go to microchip manufacturers to incentivize construction of domestic semiconductor fabrication plants — or “fabs” — to make the chips, which are used in a wide variety of products, including motor vehicles, cellphones, medical equipment and military weapons. A shortage of semiconductor chips during the coronavirus pandemic has caused price hikes and supply-chain disruptions in several industries.
“This is one of the most significant, long-term thinking bills we’ve passed in a very long time,” Senate Majority Leader Chuck Schumer, D-N.Y., said Wednesday. “I told our caucus yesterday that our grandchildren will hold good-paying jobs in industries we can’t even imagine because of what we are doing now. ... This is going to go down as one of the major bipartisan achievements of this Congress.”
The bill also includes about $100 billion in authorizations over five years for programs such as expanding the National Science Foundation’s work and establishing regional technology hubs to support startups in areas of the country that haven’t traditionally drawn big funding for tech.
“These investments will go a long way in reversing the decline in federal [research and development] that has dropped threefold since 1978,” said Sen. Maria Cantwell, D-Wash., chair of the Senate Commerce, Science and Transportation Committee. “And the more dispersed the innovation is, you never know where the next Bill Gates or Bill Boeing is going to be from and what innovation they might come up with.”
The bill next moves to the House, where Speaker Nancy Pelosi, D-Calif., has said it has support for passage. Key members of Congress have said they could have the bill on President Joe Biden’s desk by the end of the week.
Biden has said the legislation is one of the top priorities on his agenda, and he called for Congress to get the bill to his desk as soon as possible.
“We’re close. We’re close,” Biden said Monday in a White House meeting with business and labor leaders. “So let’s get it done. So much depends on it.”
Commerce Secretary Gina Raimondo, who has been spearheading the White House’s efforts to lobby for the bill, noted Monday that the United States used to make 40% of the world’s chips but now makes about 12% — and “essentially none of the leading-edge chips,” which come almost entirely from Taiwan.
The United States has invested “nearly nothing” in semiconductor manufacturing, she said, while China has invested $150 billion to build its domestic capacity. Raimondo also said it was critical for the United States to be able to compete with countries around the world that have been providing subsidies to semiconductor companies to build factories.
“The chips funding will be the deciding factor on where those companies choose to expand,” Raimondo said. “We want them, we need them, to expand here in the United States.”
On Wednesday, Sen. Roger Wicker, R-Miss., a key GOP negotiator on the legislation, argued there was no more important competition than the one for “technological supremacy” between the United States and China.
“The outcome will shape the global balance of power for decades and will impact the security and prosperity of all Americans,” Wicker said. “Regrettably, at this moment, we are not in the driver’s seat on a range of important technologies. China is. China and other nations are increasingly dominant in tech innovation, posing a massive threat to not only our economy but to our national security.”
The White House has also pointed to the semiconductor chip shortage as a national security issue. In an interview Tuesday with Washington Post Live, Sen. Kyrsten Sinema, D-Ariz., an original co-sponsor of the bill, said that some senators joined a classified briefing a few weeks ago at which they learned about some of the geopolitical concerns the United States is facing.
“And it helped create a greater sense of urgency, I hope, in both the House and the Senate . . . to help everyone see how important and how urgent this is,” Sinema said. “The good news is that we were able to respond to that quickly. And I expect, by the end of the week, our bill is going to be on the president’s desk.”
The Senate’s passage of the bill Wednesday comes after months of debate and setbacks, and the measure was nearly hindered further by weather delays and the absence of several senators who tested positive for the coronavirus recently. The legislation resembles the sprawling United States Innovation and Competition Act, the original form of the bill, which cleared the Senate last year but ran aground in the House.
And although the bill saw bipartisan support, several key Republican senators voted no. Those opposed include retiring Sens. Richard Shelby of Alabama and Patrick Toomey of Pennsylvania. Sen. Tommy Tuberville, R-Ala., also opposed the bill, despite Lockheed Martin chief executive Jim Taiclet’s wholeheartedly endorsing the legislation in his meeting with Biden this week, emphasizing that semiconductor chips are a critical component of Javelin missiles, which are manufactured in Alabama.
Sen. Bernie Sanders, I-Vt., who has criticized the bill as one that would give “blank checks to profitable microchip companies,” also opposed the legislation and argued before the final vote that it needed stronger guardrails. The “CHIPS and Science” bill includes provisions that would prohibit companies from using the funding they receive for stock buybacks or the payment of dividends.
Sen. Todd Young, R-Ind., a co-sponsor of the legislation, pushed back on Sanders’s criticisms of the bill, saying he saw it as a national security investment.
“Ronald Reagan used to say often that defense is not a budgetary issue,” Young said in a Washington Post Live interview Tuesday. “You spend what you need, and if this economy during the course of the pandemic until the present day has demonstrated anything, it’s that we need an economy that is more resilient.”
Pelosi has vowed to move quickly on the bill once it arrives in the House. At an event in Michigan on Friday with labor leaders and the state’s congressional delegation, she said there was some support for the bill among GOP lawmakers in the House.
“They understand the national security aspects of it,” Pelosi said. “I don’t know how many [Republican votes] we get, but it will be bipartisan.”
The Washington Post’s Jeanne Whalen contributed to this report.