The bill aims at subsidising the US’s domestic semiconductor industry, aiming to make it more self-sufficient and less reliant on China
This week, the US Senate has voted 64 to 34 in favour of advancing the long-awaited semiconductor bill, meaning it could be just weeks away from being signed into law.
Now that this major procedural step has been cleared, the next steps will see the Senate hold a final vote to pass the bill later this week or early next week, before sending it for another vote in the House of Representatives. If they too pass the bill, then it will be finally sent to the desk of President Joe Biden, where it will be written into law.
The Creating Helpful Incentives for the Production of Semiconductors (CHIPS) for America Act has been being considered for many months, having gone through numerous revisions before being presented in its current “slimmed down” form.
The $52 billion bill is set to allocate $39 billion to “build, expand, or modernize domestic facilities”, $11 billion for R&D, and the final $2 billion dedicated to adjacent topics, like education, defence, and future innovation.
Lastly, the bill also includes a four-year 25% investment tax credit for manufacturing, potentially worth around $24 billion.
The funding could be allocated to both domestic US firms, as well as foreign companies looking to manufacture semiconductors within the US.
The semiconductor supply crisis that emerged as a result of the coronavirus pandemic in 2020 is still ongoing, causing major delays and driving up the price of various technologies, perhaps most noticeably smartphones. But more importantly, it has thrown into stark relief the reliance that economies like the US and Europe have on countries like China and Taiwan when it comes to manufacturing these crucial chips.
With the trade war between the US and China also in full swing, the CHIPS bill was devised an effort to redress this imbalance of power and reduce the US’s reliance on Chinese manufacturing power.
The semiconductor industry itself has pushed for the bill to be adopted into legislation as soon as possible, fearing that even a short delay this month would mean trapping the bill behind the Senate’s customary August break and then miring it within the tumultuous autumn election cycle.
Intel, for example, has said that the government funding will be crucial to the speed at which it can set up its planned $100 billion chip fabrication plant in Ohio.
"[Without government funding] we’re still going to start the Ohio site. It’s just not going to happen as fast and it’s not going to grow as big as quickly," explained Intel CEO Pat Gelsinger earlier in the year.
“Time is of the essence,” says Gelsinger, who noted that the US’s economic security rests on having a reliable and resilient access to semiconductors.
China, meanwhile, has itself already launched major semiconductor industry incentives in the past two years, aiming for ‘self-reliance’ from US technologies as soon as possible.
How would a flourishing domestic semiconductor industry benefit the wider US telecoms sector? Find out from the experts at the first ever Connected America conference next year