With Sen. Maria Cantwell looking on, President Joe Biden on Tuesday signed into law a bipartisan bill that will invest $280 billion in scientific research and manufacturing, including $52.7 billion in subsidies to boost domestic production of semiconductor chips, to bolster U.S. competition with China.
“Fundamental change is taking place today – politically, economically and technologically,” Biden said at the signing ceremony outside the White House, adding that he believes “that 50, 75, 100 years from now, people who will look back to this week, they’ll know that we met this moment.”
Cantwell – a Washington Democrat who chairs the Senate Commerce, Science and Transportation Committee – was a key architect of the CHIPS and Science Act, which includes an investment of nearly $170 billion in science and technology over five years. Universities and companies in Eastern Washington and North Idaho could compete for those funds, including $10 billion to establish regional technology hubs across the country.
“The information age is now driven in so many ways by semiconductors,” Cantwell said in an interview. “We fell behind as a country … and if we do nothing we’re going to shrink even from that, so the point of this is to make chips in the United States of America, and cutting-edge chips to lead the future.”
Once a global leader in semiconductor manufacturing, the United States now produces only about 10% of the world’s microchips while 75% are made in East Asia, according to the White House. Nearly all of the most advanced semiconductors are produced in Taiwan, which has been the subject of saber-rattling from China after House Speaker Nancy Pelosi of California visited the island nation on Aug. 2 along with other House Democrats, including Rep. Suzan DelBene of Medina, Washington.
“Right now, most of the manufacturing of semiconductors is done in Taiwan,” Cantwell said, warning that a Chinese invasion of the island would devastate the U.S. economy. “You think the chip shortage affects you today? If that scenario played out, we would be in a catastrophe.”
The White House said tax incentives included in the bill will spur $44 billion in private-sector investments, led by $40 billion from Boise-based Micron Technology to create up to 40,000 new jobs and boost domestic manufacturing of memory chips from 2% to 10% of global production within a decade. Micron CEO Sanjay Mehrotra attended the signing along with Boise’s Democratic mayor, Lauren McLean.
The bill’s final passage came more than a year after Cantwell helped shepherd an earlier version of the legislation through the Senate in June 2021. It passed the Senate on July 27 by a vote of 64-33, including 16 Republicans, with three senators not voting. Sens. Mike Crapo and Jim Risch of Idaho, both Republicans, opposed the bill.
The House passed it a day later with 24 Republicans joining all the chamber’s Democrats in support. Eight of those House Republicans are from Ohio, where chipmaker Intel plans to build a new plant. Rep. Cathy McMorris Rodgers of Spokane – along with fellow GOP Rep. Dan Newhouse of Sunnyside and Rep. Russ Fulcher, whose district includes North Idaho – voted against the legislation.
In a statement July 27, McMorris Rodgers likened the bill to the Chinese Communist Party’s model of subsidizing industry with government spending.
“China tries to compete with the U.S. and other economies using any means necessary,” she said. “They do not adhere to free market principles or the high labor and environmental standards that we have here in America. This is not a model America should be inspired by or embrace – we cannot beat the CCP at their own game of massive government subsidies.”
Along with grants and other incentives, the bill includes a 25% tax credit for companies that invest in U.S. manufacturing, with restrictions that prevent the funds being used for plants in China. The nonpartisan Congressional Budget Office has estimated the bill will increase federal deficits by about $79 billion over a decade.
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