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Legislation to subsidize U.S.-made semiconductor chips heads to Biden's desk

President Biden led a virtual meeting on the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act on Monday, ahead of the Senate vote.
Anna Moneymaker
Getty Images
President Biden led a virtual meeting on the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act on Monday, ahead of the Senate vote.

The Senate is one step closer to passing a major piece of legislation aimed at supporting domestic manufacturing of semiconductor chips that power the nation's smartphones, cars, computers, medical equipment and weapons systems. The upper chamber cleared a procedural vote Tuesday morning, teeing up a final vote this week.

The CHIPS bill, short for Creating Helpful Incentives to Produce Semiconductors for America Act, would provide $54 billion in grants for semiconductor manufacturing and research, tens of billions to support regional technology hubs and a tax credit covering 25 percent of investments in semiconductor manufacturing through 2026.

The bill is a narrower version of an economic competitiveness package that passed the Senate last year but stalled in the House.

Backers say the bill would reduce reliance on China

Supporters argue the legislation is long overdue and will lower U.S. reliance on China for chip manufacturing, which they say poses a national security risk.

According to the Congressional Research Service, nearly four-fifths of global fabrication capacity was in Asia as of 2019.

"We used to make 40% of the world's chips, we make about 12% now," Secretary of Commerce Gina Raimondo said during a virtual roundtable with President Biden Monday afternoon. "The reality is, while we have invested nothing to spur domestic chip manufacturing, China has invested more than $150 billion to build their own domestic capacity. So we're very much behind."

The Biden administration says enhancing the chip industry at home will also help ease supply chain disruptions.

But critics of the legislation, including Sen. Bernie Sanders, an Independent who caucuses with the Democrats, question subsidizing the semiconductor industry.

"Let us rebuild the U.S. microchip industry, but let's do it in a way that benefits all of our society, not just a handful of wealthy, profitable and powerful corporations," Sanders said in a statement.

The legislation also authorizes roughly $100 billion in spending over five years on scientific research, including more than $80 billion for the National Science Foundation.

"Chips alone are not going to be sufficient to preserve U.S. technology leadership, which is why we need the rest of the innovation bill so that we invest not just in the core technology powering innovation today, but also the technologies that will power innovation tomorrow," National Security Adviser Jake Sullivan said during the White House roundtable.

The CHIPS bill is one of the major legislative priorities before Congress as the August recess looms. Democrats will need at least 11 Republicans to vote for the bill in order for it to pass.

Seventeen Republican senators voted to advance the legislation Tuesday: Sens. Roy Blunt of Missouri, Richard Burr of North Carolina, Shelley Moore Capito of West Virginia, Bill Cassidy of Louisiana, Susan Collins of Maine, John Cornyn of Texas, Steve Daines of Montana, Lindsey Graham of South Carolina, Bill Hagerty of Tennessee, Mitch McConnell of Kentucky, Jerry Moran of Kansas, Rob Portman of Ohio, Mitt Romney of Utah, Ben Sasse of Nebraska, Thom Tillis of North Carolina, Roger Wicker of Mississippi and Todd Young of Indiana.

If the Senate passes the bill, it will then move to the House — where there is already strong bipartisan support, including Reps. Michael McCaul, the ranking Republican and the Foreign Affairs Committee, and John Katko, the top Republican on the Homeland Security Committee.
Copyright 2022 NPR. To see more, visit https://www.npr.org.

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Barbara Sprunt is a producer on NPR's Washington desk, where she reports and produces breaking news and feature political content. She formerly produced the NPR Politics Podcast and got her start in radio at as an intern on NPR's Weekend All Things Considered and Tell Me More with Michel Martin. She is an alumnus of the Paul Miller Reporting Fellowship at the National Press Foundation. She is a graduate of American University in Washington, D.C., and a Pennsylvania native.