Senate votes to advance bill to subsidize U.S.-made semiconductor chips

WASHINGTON — The Senate voted Tuesday to advance a bill that would provide $52 billion in subsidies to domestic semiconductor manufacturers.

The measure will also invest billions in science and technology innovation, in a bid to strengthen the United States’ competitiveness and self-reliance in what is seen as a keystone industry for economic and national security.

The legislation – which has been referred to as the “CHIPS Act” but which Senate Majority Leader Chuck Schumer, D-N.Y., dubbed the “Chips and Science” bill Tuesday – resembles the United States Innovation and Competition Act.

That was the original form of the bill that cleared the Senate last year but ran aground in the House.

On Tuesday morning, the Senate voted 64-32 to limit debate and move the bill toward a final vote.

If the Senate passes the bill, as expected, it would then move to the House, where Speaker Nancy Pelosi, D-Calif., has said it has the support for passage.

President Joe Biden has said the chips funding legislation is one of the top priorities on his agenda, and he convened a virtual meeting Monday with a group of business and labor leaders to discuss the bill’s importance.

Semiconductor chips are used many products, including vehicles and cellphones, medical equipment and military weapons, he said, and a shortage of chips during the coronavirus pandemic has caused price hikes and supply-chain issues in several industries.

“America invented semiconductors, but over the years, we let the manufacturing of those semiconductors get sent overseas,” Biden said.

“And we saw that, during the pandemic, when our factories overseas that make these chips shut down … the global economy basically comes to a halt, driving up the costs for families all around the world but particularly here at home.”

Commerce Secretary Gina Raimondo, who has been spearheading the White House’s efforts to lobby for the bill, noted Monday that the United States used to make 40% of the world’s chips but now makes about 12% – and “essentially none of the leading-edge chips,” which come almost entirely from Taiwan.

The United States has also invested “nearly nothing” in semiconductor manufacturing, she said, while China has invested $150 billion to build its own domestic capacity.

“It’s no wonder China is watching this bill so carefully and actively lobbying U.S. businesses against this bill,” Biden said, calling for Congress to get the bill to his desk as soon as possible.

“We’re close. We’re close,” he added. “So, let’s get it done. So much depends on it.”

Much of the $52 billion would go to chip manufacturers to incentivize construction of domestic semiconductor fabrication plants – or “fabs” – to make the components, which are the brains that power all modern electronics.

Countries around the world have been scrambling to increase production of the components by offering manufacturers subsidies to build factories, which cost billions of dollars to construct.

“It’s not possible to have a strong economy and a strong country if we don’t make things in America and certainly if we don’t make chips in America,” Raimondo said.

“Right now, American chip manufacturers are finalizing their investment plans and … the chips funding will be the deciding factor on where those companies choose to expand. We want them, we need them, to expand here in the United States.”

The bill also includes about $100 billion in authorizations over five years for programs including expanding the National Science Foundation’s work and establishing regional technology hubs to support start-ups in areas of the country that haven’t traditionally drawn big funding for tech.

The NSF would receive funds for a new technology directorate that would help turn basic research breakthroughs into real-world applications in fields such as artificial intelligence and quantum computing.

National security adviser Jake Sullivan on Monday said a disruption to the United States’ chip supply would be “catastrophic” but emphasized that chips manufacturing alone would not be sufficient to bolster U.S. production without the corresponding investments in science and technology.

The Senate’s advancement of the bill Tuesday came after months of debate and setbacks, and was nearly hindered further by weather delays and the absence of several members who tested positive for the coronavirus recently.

The cloture vote was originally scheduled for Monday but was moved after storms caused flight delays at Washington-area airports.

On Tuesday, Sens. Tina Smith, D-Minn., and Thomas Carper, D-Del., who both tested positive for the coronavirus last week, returned to the Senate – masked – to vote to advance the bill.

Though there was bipartisan support in the Senate to advance the bill, several key Republican senators still voted no, including retiring Sens. Richard Shelby, Ala., and Patrick Toomey, Pa. Sen.

Tommy Tuberville, R-Ala., also opposed advancing the bill, despite Lockheed Martin chief executive Jim Taiclet wholeheartedly endorsing the legislation in his meeting with Biden the day before.

Taiclet said semiconductor chips are a critical component of Javelin missiles, which are manufactured in Alabama.

Sen. Bernie Sanders, I-Vt., who voiced his opposition to the bill leading up to Tuesday’s vote, also voted against advancing the legislation.

Pelosi has vowed to move quickly on the bill once it arrives in the House.

At an event in Michigan last Friday with labor leaders and the state’s congressional delegation, Pelosi said there was some support for the bill from GOP lawmakers.

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