By Catherine Sbeglia Nin
The US Senate on Wednesday passed the CHIPS bill, or the Creating Helpful Incentives to Produce Semiconductors for America Act, which aims to estabish a competitive edge over China by injecting us$59 billion into domestic semiconductor manufacturing and research and providing an additional tax credit tax credit for chip plants that is estimated to be worth US$24 billion.
“This is going to go down as one of the major bipartisan achievements of this Congress, along with the Infrastructure Investment and Jobs Act and the recent gun safety law,” Senate Majority Leader Chuck Schumer, D-N.Y., said of the bill, which passed the Senate in a 64-33 vote.
SEMICONDUCTOR CHIPS ARE THE BUILDING BLOCKS OF THE MODERN ECONOMY – THEY POWER OUR SMARTPHONES AND CARS.
AND FOR YEARS, MANUFACTURING WAS SENT OVERSEAS. FOR THE SAKE OF AMERICAN JOBS AND OUR ECONOMY, WE MUST MAKE THESE AT HOME.
THE CHIPS FOR AMERICA ACT WILL GET THAT DONE.
— President Biden (@POTUS) July 26, 2022
The CHIPS Act earmarks US$39 billion in funds to subsidize companies with plans to expand or build new semiconductor manufacturing facilities in the US. These funds will be distributed over the next five years at the discretion of the Commerce Department. Another US$10 billion is designated for semiconductor research, and there is additional funding set aside to support workforce development and collaboration with other countries.
The next stop for the bill is the House. If it passes the House, it will be sent to the White House for President Joe Biden’s signature. Biden took to Twitter prior to the Senate vote to express his support for the bill.
“Semiconductor chips are the building blocks of the modern economy – they power our smartphones and cars. And for years, manufacturing was sent overseas,” the President tweeted. “For the sake of American jobs and our economy, we must make these at home. The CHIPS for America Act will get that done.”
While supporters of the bill claim that it will reduce the United States’ reliance on China and strengthen its position in the global market, others have pointed out that China, as well as South Korea and several regions in the European Union, are also significantly upping investments in semiconductor manufacturing and research. Further, there is little reason to believe that the CHIPS Act funding will do much to ease supply chain constraints in the semiconductor market, mostly because semiconductor plants built with this funding, likely won’t be produce chips until many years after this current shortage ends.
