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Senate passes bipartisan bill to subsidize U.S.-made semiconductor chips

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Senate passes bipartisan bill to subsidize U.S.-made semiconductor chips

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The Senate on Wednesday passed a bipartisan bill that would provide $52 billion in subsidies to domestic semiconductor manufacturers and invest billions in technological innovation to enhance U.S. competitiveness in industries deemed critical and The ability for self-reliance. economy and national security.

The Senate passed the $280 billion “Chip and Science Act” by a vote of 64 to 33, the final iteration of a bill that has been years in the making. About $52 billion will go to microchip makers to incentivize the construction of domestic semiconductor manufacturing plants, or “fabs,” to make chips used in a variety of products, including cars, cell phones, medical equipment and military weapons. Shortages of semiconductor chips during the coronavirus pandemic have led to higher prices and supply chain disruptions across multiple industries.

“This is one of the most important, long-term bills we have passed in a long time,” Senate Majority Leader Charles E. Schumer (D-N.Y.) said Wednesday. “I told our caucus yesterday that our grandchildren are going to be in high-paying jobs in industries we can’t even imagine because of what we’re doing right now. … This will be a major bipartisan achievement in this Congress one.”

The bill also includes authorizing about $100 billion over five years for programs such as expanding the work of the National Science Foundation and establishing regional technology centers to support start-ups in parts of the country that have not traditionally received significant funding for tech.

“These investments will go a long way in turning around the federal [research and development] That number has tripled since 1978,” said Sen. Maria Cantwell (D-Wash.), chair of the Senate Committee on Commerce, Science and Transportation. “And the more fragmented innovation is, you never know what’s next. Where would Bill Gates or Bill Boeing come from and what kind of innovations might they come up with. “

The bill will next move to the House of Representatives, where Speaker Nancy Pelosi (D-Calif.) expressed her support for passage. Key members of Congress said they could have the bill on President Biden’s desk by the end of the week.

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Biden has said the legislation is one of the top priorities on his agenda, and he called on Congress to get the bill to his desk as soon as possible.

“We’re close. We’re close,” Biden said Monday at a White House meeting with business and labor leaders. “So let’s get it done. A lot depends on it.”

Commerce Secretary Gina Raimondo, who has been spearheading the White House lobbying for the bill, noted Monday that the U.S. used to make 40 percent of the world’s chips, but now accounts for about 12 percent — and “basically makes 40 percent of the world’s chips.” No lead “chips”, almost all from Taiwan.

The U.S. has “almost no investment” in semiconductor manufacturing, she said, while China has invested $150 billion to build domestic capacity. Raimondo also said it was crucial that the U.S. was able to compete with countries in the world that have been subsidizing semiconductor companies to build factories.

“Chip funding will be the deciding factor for these companies to choose to expand,” Raimondo said. “We want them, we need them, to expand in America.”

On Wednesday, Republican Sen. Roger Wicker, the bill’s lead Republican negotiator, argued that there is no more important competition than the fight for “technological supremacy” between the United States and China.

“The outcome will shape the global balance of power for decades and will affect the security and prosperity of all Americans,” Wake said. “Unfortunately, at this moment, we do not have a range of important technologies. China is. The growing dominance of China and other countries in technological innovation poses huge implications not only for our economy, but also for our national security. threaten.”

The White House also pointed to the semiconductor chip shortage as a national security concern. In a live interview with The Washington Post on Tuesday, Sen. Kyrsten Sinema (D-Ariz.), the bill’s original co-sponsor, said some senators attended a classified briefing a few weeks ago where they learned about some geopolitical issues. Political worries facing America.

“I hope, this will help create a greater sense of urgency in the House and Senate … to help everyone see how important and how urgent this is,” Sinema said. “The good news is that we were able to respond quickly. I expect our bill will be on the president’s desk by the end of the week.”

The bill passed the Senate on Wednesday, the culmination of years of exploration by Schumer, who has long warned that China’s rise is a threat to U.S. global economic leadership and national security. Three years ago, Schumer began drafting a predecessor bill with Sen. Todd C. Young (R-Ind.) that took a tortuous path — at least five name changes and numerous amendments before it passed Wednesday, Known as the “Chip and Science Act of 2022.”

“The idea of ​​investing in companies and science has been on the back burner for the past 30 or 40 years, in part because Democrats don’t want to help companies, and Republicans say they don’t want industrial policy, just laissez-faire,” Schumer said in an interview Wednesday. “It took a long time to convince people that this was so important and so necessary.”

Schumer and Young formed a powerful group of outside political supporters that included business leaders and academic personalities who helped build bipartisan legislation. Adding semiconductor provisions originally backed by Sens. John Cornyn (R-Tex.) and Mark R. Warner (D-Va.) further expands the coalition behind the bill.

But the bill has hit roadblocks after political hurdles — including an ultimatum from Senate Minority Leader Mitch McConnell (R-Ky.) in late June, who threatened unless Democrats abandoned their partisan line plan to pass a sweeping Economic legislation that would otherwise, among other things, undo the 2017 Republican tax cuts. Schumer said he called dozens of business leaders days later, asking them to contact Republican senators to support the bill.

“We know they won’t oppose McConnell, but [they could] Go to McConnell and say we really want to pass this bill,” Schumer said.

In the end, Democrats may have cleared the way: Sen. Joe Manchin III (DW.Va.) said earlier this month that he would not support repealing the 2017 tax cut to give Republicans room Stay away from the McConnell ultimatum.

Schumer declined Wednesday to comment on whether passage of the bill was worth the price. He did say the legislation would “create countless jobs” and allow the United States to “reimagine our place in the world economy.”

“In the past, we just said it would be fine for our company to go away on its own,” he said. “But now we have nation-states that heavily subsidize science, research and advanced manufacturing, and if we do nothing, we’ll be a second-rate economic powerhouse within a generation.”

Although the bill has bipartisan support, several key Republican senators voted against it. Opponents include retired Senators Richard C. Shelby (Alabama) and Patrick J. Toomey (Pennsylvania). Sen. Tommy Tuberville (R-Ala.) also opposed the bill, although Lockheed Martin CEO Jim Tecklet wholeheartedly supported the bill when he met with Biden this week, emphasizing semiconductors The chip is a key component of the manufactured Javelin missile. in Alabama.

Sen. Bernie Sanders (I-Vt.), who criticized the bill for giving “a blank check to profitable microchip companies,” also opposed the legislation, arguing before the final vote that it needed stronger guardrails. The Chips and Science Act includes provisions prohibiting companies from using the funds they receive for share buybacks or paying dividends.

Young, the co-sponsor of the bill, countered Sanders’ criticism of the bill, saying he sees it as a national security investment.

“Ronald Reagan used to say that defense is not a budget issue,” Young said in a live interview with The Washington Post on Tuesday. “You spend what you need, and if the economy has shown anything during the pandemic until now, it’s that we need a more resilient economy.”

Pelosi has vowed to act quickly once the bill reaches the House. At an event in Michigan on Friday with labor leaders and the state’s congressional delegation, she said House Republicans had some support for the bill.

“They understand the national security aspects of it,” Pelosi said. “I don’t know how many [Republican votes] We got it, but it would be bipartisan. “

Jeanne Whalen contributed to this report.

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