Clean room at SkyWater Technology Inc where computer chips are manufactured in Bloomington

US Senate passes bill to boost chip manufacturing to compete with China – Reuters

WASHINGTON (Reuters) – The U.S. Senate on Wednesday passed sweeping legislation to support the domestic semiconductor industry, hoping to boost companies as they compete with China and alleviate persistent shortages that have affected everything from cars, weapons, washing machines and video. Toys.

The House of Representatives plans to vote Thursday on the long-awaited bill after the Senate passed it by 64 votes to 33 bipartisan. If approved as expected, President Joe Biden plans to sign it into law as early as next week.

The Chips and Science Act provides about $52 billion in government subsidies for American semiconductor production and an investment tax credit for chip manufacturers estimated at $24 billion.

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The legislation would also allow more than $170 billion over five years to boost US scientific research to better compete with China. Congress will still need to pass separate appropriations legislation to fund those investments.

“This legislation will create good-paying jobs, ease supply chains, help lower costs, and protect America’s national security interests,” said Senate Democratic Majority Leader Chuck Schumer.

Senator Mark Warner said the bill would help fund 10 to 15 new semiconductor plants. “If we don’t, there won’t be another American semiconductor manufacturing plant being built in this country,” Warner said.

Others noted that China lobbied against the bill.

“This is a bad day for President Xi and for the Chinese Communist Party,” Senator John Cornyn said. “The sleeping giant, America, has finally awakened to the challenge we face from the People’s Republic of China.”

The Chinese Embassy in Washington said China “strongly opposes” the bill, which it said is “rooted in the Cold War and zero-sum game mentality and goes against the common aspirations of people from all sectors in China and the United States to enhance exchanges and cooperation.”

Most of the funding has been allocated to new factories, which will take two or three years to build. Boeing Company (ban) She said she was still experiencing supply chain issues from chip shortages.

Workers work inside the clean room of US semiconductor manufacturer SkyWater Technology Inc, where computer chips are made, in Bloomington, Minnesota, US, April 2022 in this photo posted by Reuters on July 19, 2022. SkyWater Technology/Handout via REUTERS

On Tuesday, General Motors (GM.N) She said she has more than 90,000 unfinished vehicles, mostly trucks and SUVs, waiting for chips and other parts. Thousands are parked in southeast Michigan.

Lawmakers said they would normally not support massive subsidies for private companies, but noted that China and the European Union are giving out billions of dollars in stimulus. They also cited national security risks.

“What we are convinced of is that there is a real problem here,” Senator Maria Cantwell said. “When we were faced with what was a real threat to the competitiveness of the United States, we responded…there were people who were betting against us.”

working months

The enactment of the bill into law would come after more than a year of work. The Senate passed a more comprehensive version of the legislation with great fanfare in June 2021, but it stalled in the House. This has frustrated lawmakers from both parties who view competition with China and global supply chain issues as top priorities.

To urge Congress to take action, Biden and other proponents of the bill have raised the issue from a national security perspective, arguing that it is necessary to ensure US production of critical chips for a wide range of consumer goods and military equipment.

Senator Mark Kelly said that if the United States lost access to chips made in Taiwan, it could shrink US GDP by 10% and hamper auto production.

Biden urged the House of Representatives to pass the bill quickly.

“As Americans are concerned about the state of the economy and the cost of living, the CHIPS bill is one answer: It will speed up semiconductor manufacturing in America, and lower prices on everything from cars to dishwashers,” he said in a statement. Senate vote.

Critics such as Senator Bernie Sanders – the only Senate Democratic caucus to vote against the bill – have called the measure a “blank check” for highly profitable chipmakers.

Lawmakers are working on other provisions that could address other weaknesses in the supply chain.

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(Reporting by Patricia Gingerly and David Shepardson) Editing by David Gregorio

Our criteria: Thomson Reuters Trust Principles.

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