It may become cheaper and easier to buy popular tech products, such as game consoles and graphics cards, after Congress approves $52 billion in funding for domestic semiconductor manufacturing.
In a 243-187 During Thursday’s vote, the House passed the $280 billion CHIPS and Science Act to bolster U.S. science and technology innovation. The bill, a priority of the Biden administration, includes $52 billion in subsidies to encourage chip manufacturers to build semiconductor manufacturing plants, or “fabs,” in the US.
After months of negotiations between the House and Senate, Thursday’s approval resolves the looming threat of chipmakers rethinking plans to build US factories. Earlier this month, the groundbreaking ceremony for a $20 billion Intel foundry was postponed as funding stalled.
“The American people may not know it, but semiconductors are an integral part of their everyday experiences,” said Representative Frank Pallone Jr. (D-NJ) in a statement on the floor Thursday ahead of the vote. “They are microchips used in cars, consumer electronics and washing machines.”
The coronavirus pandemic has turned a wide range of industries upside down, but especially companies that make products that require semiconductor chips. Demand for tech products, such as laptops, consoles and tablets, skyrocketed as consumers became accustomed to spending more time at home rather than at school or in the office. The confluence of demand and pandemic-related supply chain disruptions led to a global semiconductor shortage that hardware vendors, such as Nvidia and AMD, are just beginning to solve.
But the pandemic crisis in the supply chain inspired lawmakers, namely Senator Chuck Schumer (D-NY), to draft legislation to make it more feasible for chipmakers to hire American workers and build their products domestically. In recent decades, semiconductor factories have shipped factories and jobs abroad, mainly to countries like China, to reduce production and shipping costs. The CHIPS and Science Act is the Biden administration’s commitment to incentivize chipmakers to reverse course and build fabs in the US.
“For decades, some ‘experts’ said we should give up production in America. I never believed that. Manufacturing jobs are back,” President Joe Biden said in a statement on Wednesday. “Thanks to this bill, we’ll get even more.”
President Joe Biden has encouraged lawmakers to pass the measure, but it is unclear when he plans to sign the law.
The CHIPS and Science Act is the final version of an innovation law that has seen numerous title and language changes since the concept was first introduced in 2019. The first draft of the law was called the Endless Frontier Act, a nod to President Franklin D. Roosevelt . Last summer, the Senate passed a newer version of the bill called the U.S. Innovation and Competition Act, which stalled as House and Senate leaders negotiated amendments.
But as pressure mounted due to an impending August recess and midterm election cycle, lawmakers accelerated to pass a smaller bill, the CHIPS and Science Act, which curtailed some of the previous package’s ambitions. but billions for making domestic chips.
As the bill got closer to pass, progressives became more optimistic in their opposition to the measure. In a statement earlier this monthSenator Bernie Sanders — a Vermont independent who consults with Democrats — criticized the bill for serving as a “blank check” for profitable semiconductor companies, despite supporting the expansion of domestic microchip production.
“There is no discussion that the shortage of microchips and semiconductors poses a serious threat to our nation,” Sanders said. “What I cannot understand is why so many in Congress are so eager to pay these bribes.”
Sanders’ statements cooled optimism that the House Democrats might get enough support to pass the bill. It was unclear how many members of the House Congressional Progressive Caucus would vote hours to pass the bill.
In addition to the chips subsidies, the bill provides the Commerce Department with $10 billion to provide grants to states and municipalities to build “regional technology hubs” across the country. The hubs would serve as mini-Silicon Valleys to bring jobs and economic growth to areas hard hit by globalization. The National Science Foundation will also receive billions in additional funding for semiconductor manufacturing research and personnel development programs.
