US Senate approves $280 billion boost to chip industry

The US Senate on Wednesday approved a $280 billion bill aimed at boosting the semiconductor industry vital to modern technology to counter the competitive threat posed by China, the Wall Street Journal reported.

According to the US newspaper, the vote reflects the “growing concern” of both parties that Washington will not take a “long-term response” to the Chinese economic and technological renaissance, a vision that has crystallized strongly, after the Corona pandemic disrupted the supply has. of Asian electronic chips, which affected the All major industries.

The Chips and Science Act of 2022 allocates $52.7 billion in direct financial assistance to build and expand semiconductor manufacturing facilities, among other things, and adds $24 billion in “tax incentives and other provisions,” which would lead to “increased federal spending on scientific research”. .” , reflecting concern that “without more investment in this sector, the United States may struggle to maintain its technological edge.”

The law was approved by a vote of 64 to 33, with 17 Republicans joining the Democratic bloc in near-unanimous approval as business leaders celebrated the vote, which allocates $39 billion to semiconductor manufacturing, and also includes $11 billion to semiconductor -develop industry research and workforce training In addition, a $2 billion fund is established to rapidly convert laboratory developments into military and other applications.

“This would mean creating more resilient American supply chains, thereby eliminating our dependence on foreign countries for the critical technology we need,” President Joe Biden, who strongly supports the bill, said in a statement.

Republican fury

But the approval, announced late Wednesday, of the Democrats’ climate, health care and tax bills sparked Republican outrage, potentially “undermining House Republicans’ support for the chip bill,” which aides described as bipartisan as “necessary to accept the law.”

Opponents of the bill have pushed for more restrictions on funding, questioning the wisdom of providing so much support to this lucrative industry.

“I sent a letter to members of the US House of Representatives urging them to reject the massive CHIPS bill,” tweeted Republican Senator Rick Scott.

He added: “This bad bill is going to spend $280 billion. We have to stop it and demand accountability to American taxpayers.”

By favoring a specific industry such as chips, the US is practicing a type of “industrial policy”, which it has long avoided before, but supporters of the law said the change was “necessary for the US’s continued competitiveness”.

In this context, Senate Majority Leader Chuck Schumer said in an interview this week that “in the 1970s and 1980s, our companies could do well on their own.”

“But in the 21st century, with countries investing heavily in this sector, like China and Germany, we will be on the sidelines, and who will lose? American workers, American economic dominance and our national security,” he added.

Schumer noted that work on this law has been ongoing for more than 3 years, as he only began discussing it with Republican Senator Todd Young in 2019 when they worked out together at a Senate gym.

Beneficiary companies

The list of companies that could benefit from financing US expansion in this industry includes Intel, the Taiwanese Semiconductor Manufacturing Company, Micron Technolog, Applied Materials and others.

Jason Oxman, president of the Information Technology Industry Council, whose members include Intel, as well as manufacturers such as Toyota Motor Corporation and tech giants such as Amazon, said companies that make semiconductors and use semiconductors “represent America’s corporate ecosystem.

Gary Cohn, vice president of International Business Machines, called for legislative approval, saying in a recent press release, “We have to protect ourselves as a country first and make sure we’re part of the chip business.”

And the Senate approved its version of the bill last year, but work at this level stalled until last February, when the House of Representatives approved its version that added “billions of dollars to combat climate change,” in addition to “immigration clauses “. ,” after which it stopped again. , where lawmakers argued for months over “which clauses should be included or eliminated.”

security issues

U.S. Commerce Secretary Gina Raimondo rallied Democrats and Republicans, highlighting national security concerns about reliance on Taiwan or U.S. adversaries in the semiconductor industry.

The pressure on lawmakers increased last June when companies such as Intel and GlobalWafers, a silicon chip manufacturer in Taiwan, announced plans to build branches in the US city of Sherman, among others.

Members of Congress concluded at a June meeting that it was “time” to limit the bill, a White House official who attended the meeting told the Wall Street Journal.

According to the newspaper, if the bill passes in the House of Representatives, it would give Democrats “a breakthrough they’ve been talking about in a year in which much of Biden’s agenda has been disrupted, even though it could be years before new chip factories are built.” “

Democratic Senator Raphael Warnock singled out the Kia car plant in Georgia, which has been forced to shut down operations several times due to a lack of chips.

This law, he said, “will help reduce costs, create jobs in Georgia and ensure workers there are ready to compete in a changing economy.”

Great benefits

Many lawmakers also see the second component of the bill as having many domestic benefits, allocating about $170 billion to research and technology development in various federal agencies over the next 5 years.

Portions of this funding are expected to flow to rural states under new formats for distributing funds for research. The legislation also directs the Commerce Department to establish 20 state-level technology centers to create more technical jobs across the country.

The legislation sets new, long-term policies for the National Aeronautics and Space Administration by ordering it to prioritize the scientific research needed to get Americans to go to Mars, as well as programs like Artemis Moon, which will land the first woman on the moon.

The investment in research and technological development is aimed at several areas, including artificial intelligence, wireless communication and precision agriculture.

The National Science Foundation will oversee a new $20 billion administration focused on accelerating the development of technologies vital to American security, with an increase of up to $61 billion earmarked for its core activities to support researchers at universities and finance elsewhere.

The authorization budget for the Department of Energy’s Office of Science will increase to $50 billion to advance a range of programs focused on clean energy, nuclear physics and high-intensity lasers.

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