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Congress Passes CHIPS Act

Aug. 8, 2022
The current iteration of the semiconductor subsidy bill authorizes $52 billion in support funds and a 25% tax credit for U.S. chip manufacturing.

After months of stalled progress, the CHIPS-Plus Act lurched through the Senate today as the semiconductor subsidy measure amassed 64 votes in favor to beat 33 against. The bill’s passage to the House of Representatives was hailed by trade groups representing manufacturers and semiconductor companies as a step toward bolstering the domestic supply of computer chips.

According to the office of Senator Chuck Schumer (D-N.Y.), one of two co-sponsors of the original bill, the latest version contains $52 billion in funds for semiconductor manufacturers to use in building or improving existing semiconductor factories, workforce training, wireless broadband development, and regional economic development hubs. It also includes a 25% credit for companies investing in semiconductor fabricators, or fabs, in the United States.

“This bill means lowering costs for families, solving our nation’s chip shortage, strengthening our national security, and bringing manufacturing back from China to Upstate New York,” Schumer said in a statement.

Senator Todd Young (R-Ind.), the bill’s other co-sponsor, said in a statement on July 27 that the bill “will unleash private sector innovation while significantly boosting federal national security investments.”

In prepared remarks, Young cast the bill as a strike against China’s own investments, noting that China “is currently investing $1.4 trillion in frontier technologies that will dominate the 21st century” and asserting the bill would enable the U.S. “to go on the offensive.” Young also noted that chip shortages forced General Motors’ assembly plant in Fort Wayne, Indiana, to idle production twice.

The bill’s passage from the Senate to the House—where it is expected to pass quickly, thanks to bipartisan support and an impending August recess—inspired positive reactions from trade groups and the United Auto Workers.

Semiconductor Industry Association CEO John Neuffer, in a statement, commended the Senate for its “decisive progress towards strengthening America’s economy, national security, and leadership in the key technologies of today and tomorrow” before urging the House to send the bill to the President’s desk quickly.

Jay Timmons, CEO of the National Association of Manufacturers, echoed hopes the bill will improve U.S. competitiveness and called for further action on items left out of the final version of the bill.

“This bill will help strengthen American supply chains thanks to its investments in domestic semiconductor production,” Timmons said in a statement before pledging to work with Congress on items struck from previous iterations of the bill, such as an anti-counterfeiting measure.

UAW President Ray Curry’s response to the bill was similar: Passing the bill is good, but more needs to be done on the dropped policies.

“The ongoing shortage of auto-grade semiconductors is an example of what happens when our country fails to invest in U.S. manufacturing and secure our supply chains,” Curry said in a statement.

Yet, he said, the union had hoped to see the final bill include a reauthorization of the Trade Adjustment Assistance provision, which provided benefits to workers who lose their jobs due to the impacts of offshoring.

The major sticking point among critics of the bill is its price tag. According to the Congressional Budget Office, the CHIPS-Plus Act is expected to cost the U.S. government $79.3 billion over the next ten years.

Congress Passes CHIPS Act originally appeared on IndustryWeek, an Endeavor Business Media publication.