The United States Senate voted Tuesday to advance legislation intended to make the nation less reliant on Asia for semiconductors and better able to compete with China for future semiconductor market share by providing tens of billions of dollars in direct incentives to businesses willing to manufacture semiconductors in the U.S.
The CHIPS Act of 2022 would provide $52.7 billion in subsidies to domestic semiconductor manufacturers, as well as a 25 percent tax credit to those who invest in the construction of chip manufacturing facilities.
President Biden has been urging Congress to get the legislation to his desk as quickly as possible.
“America invented semiconductors, but over the years we let the manufacturing of those semiconductors go overseas,” Biden said Monday during a virtual meeting with business and labor leaders. “And we saw that during the pandemic when our factories overseas that make the chips shut down -- COVID was a big reason for it -- the global economy basically came to a halt, driving up the cost for families all around the world, particularly here at home.”
Semiconductors are a critical component in items Americans use every day, such as smart phones, cars and home appliances. The more sophisticated chips are the brains of modern weapons.
"We don't make any leading-edge semiconductors in the United States." said Commerce Secretary Gina Raimondo Sunday on Face the Nation, "and those are the sophisticated chips that you need for military equipment and high-end computing. We buy almost all of them from Taiwan."
U.S. companies used to manufacture 40 percent of the world's semiconductors, but now are responsible for just over ten percent of the market, and only the least sophisticated chips.
President Biden says the U.S. missed out on $240 billion in economic activity last year because of the chip shortage.
"So, for the sake of economy and jobs," said Biden, "we have to make the semiconductors here at home at home."
"Anything to support manufacturing, we’re going to be supportive of," said Rep, Markwayne Mullin (R-OK2) in an interview last week. But that was before he knew exactly what was in the bill.
In addition to $52.7 billion in subsidies and an estimated $24 billion in tax credits, the bill would provide $200 billion over ten years for scientific research
"Once again," said Rep. Mullin, "this is just Democrats trying to throw money at the problem, rather than solving the problem. How about we get government out of the way -- back out and allow the market to compete for space and then incentivize them."
But Biden, and many Republicans, believe the legislation is at least a good first step in solving the problem. The Senate vote on limiting debate on the measure Tuesday morning was 64-32.
Oklahoma's two Republican senators, James Lankford and Jim Inhofe, each voted no.
Final passage in the Senate is expected Wednesday. It would then go to the House where Speaker Nancy Pelosi (D-CA) has said there is enough support to pass.
"Congress must pass this bill as soon as possible to get it to my desk to sign it and get moving," said Biden.