U.S. Senate passes bill to boost computer chip production in United States

A bill designed to encourage more semiconductor companies to build chip plants in the United States passed the Senate on Wednesday as lawmakers raced to finish work on a key priority of the Biden administration and many Republicans, including Sen. Todd Young of Indiana.

The $280 billion measure, which awaits a House vote, includes federal grants and tax breaks for companies that construct their chip facilities in the U.S. The legislation also directs Congress to significantly increase spending on high-tech research programs that lawmakers say will help the country stay economically competitive in the decades ahead.

Senate passage came by a 64-33 vote. The House vote is expected later this week as lawmakers try to wrap up business before returning to their home states and districts in August.

House Speaker Nancy Pelosi, D-Calif., has said she is confident there is enough GOP support to overcome potential defections from Democrats who view the subsidy effort to boost semiconductor companies as a misplaced priority.

Seventeen Republicans voted for the measure. Sen. Bernie Sanders, I-Vt., broke ranks with Democrats in voting against the bill.

Proponents of the legislation say other countries are spending billons of dollars to lure chipmakers. Backers say the U.S. must do the same or risk losing a secure supply of the semiconductors that power automobiles, computers, appliances and some of the military’s most advanced weapons systems.

Senate Majority Leader Chuck Schumer, D-N.Y., said the bill represented one of the nation’s largest investments in science and manufacturing in decades and that with the Senate’s approval, “we say that America’s best years are yet to come.”

Opponents have been critical of the bill’s price tag. It is projected to increase federal deficits by about $79 billion over 10 years.

President Joe Biden said the bill would create jobs and lower costs on a wide range of products from cars to dishwashers.

“For decades, some ‘experts’ said we needed to give up on manufacturing in America. I never believed that. Manufacturing jobs are back,” Biden said. “Thanks to this bill, we are going to have even more of them. The House should promptly pass it and send this bill to my desk.”

The bill has been in the works for years, starting with efforts by Schumer and Sen. Todd Young, R-Ind., to increase the government’s investment in high tech research and development. While the bill has taken several twists and turns, one constant theme that lawmakers repeatedly emphasized during Wednesday’s debate was the need to keep up with China’s massive investments in cutting-edge technology.

China’s government is planning on “winning the (artificial intelligence) race, winning future wars and winning the future,” Young said. “And the truth is, if we’re being honest with ourselves, Beijing is well on its way to accomplishing these goals.”

Sen. Roger Wicker, R-Miss., said, “Regrettably, we are not in the driver’s seat on a range of important technologies. China is.” Congress, he said, now has “a chance to move us back in the right direction and put America back into a place to win the game.”

The bill provides more than $52 billion in grants and other incentives for the semiconductor industry as well as a 25% tax credit for those companies that invest in chip plants in the U.S. It calls for spending about $200 billion for various research activities over 10 years, though Congress will have to follow through by including that money in future spending bills.

The House could take up the bill as soon as Thursday.

While most Republicans are expected to oppose it, some of the ranking Republicans on committees dealing with national security—Reps. Michael McCaul of Texas, Michael Turner of Ohio and John Katko of New York—support the measure. So do many of the Republicans on a bipartisan group called the Problem Solvers Caucus, which is made up of moderates from both parties.

Indiana Gov. Eric Holcomb praised the Senate’s vote in a written statement issued Wednesday afternoon.

“The U.S. Senate just passed once-in-a-generation legislation that invests in American technology to keep our country safe from any and all of our adversaries,” he said. “The U.S. House of Representatives should quickly pass the CHIPS Plus legislation to keep America in the fast lane of the technology race and boost our country’s competitiveness globally.”

Holcomb and state economic development leaders are hoping for passage of the federal bill because the state would like to tap federal funding to land a $1.8 billion semiconductor plant at Purdue University.

Last week, Minnesota-based chipmaker SkyWater Technology and Purdue said they intend to win part of the funding to help finance a proposed factory and research facility in West Lafayette.

SkyWater chief executive Thomas Sonderman said the rough plan is for federal and Indiana state funding to pay for two-thirds of the factory, with the rest coming from SkyWater and its chip customers.

The facility would most likely make chips for the auto industry, medical device manufacturers, aerospace customers and the Department of Defense, he said.