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

President Biden during a virtual meeting with CEOs and labor leaders to discuss the importance of passing the "CHIPS Act” in the South Court Auditorium of the Executive Office Building on July 25. (Demetrius Freeman/The Washington Post)
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The Senate voted Tuesday to advance a bill that would provide $52 billion in subsidies to domestic semiconductor manufacturers, as well as 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 Charles E. Schumer (D-N.Y.) dubbed the “Chips and Science” bill on Tuesday — resembles the United States Innovation and Competition Act, the original form of the bill, which 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 legislation, as expected, it would then move to the House, where Speaker Nancy Pelosi (D-Calif.) has said it has the support for passage.

“It’s a major step forward for our economic security, our national security, our supply chains and, as I said, America’s future,” Schumer said Tuesday afternoon. “I feel this bill so passionately. It’s not one of these things that, you know, people immediately say, ‘Oh, yes, we must have that done.’ But it is something we must have done.”

President 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 in 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 percent of the world’s chips but now makes about 12 percent — 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 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 such as 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 R. Carper (D-Del.), both of whom 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 C. Shelby (Ala.) and Patrick J. 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, emphasizing that 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.

Sen. Kyrsten Sinema (D-Ariz.), an original co-sponsor of the bill, pushed back on any notion that the legislation was “rushed,” noting that she and Sen. Todd C. Young (R-Ind.) had been working on it for two years. In an interview Tuesday afternoon with Washington Post Live, Sinema said some senators had joined a classified briefing several weeks ago at which they learned about some of the geopolitical concerns the United States is facing.

“And it helped create a greater sense of urgency, I hope, in both the House and the Senate … to help everyone see how important and how urgent this is,” Sinema said. “The good news is that we were able to respond to that quickly. And I expect, by the end of the week, our bill is going to be on the president’s desk.”

Pelosi has vowed to move quickly on the bill once it arrives in the House. At an event in Michigan on Friday with labor leaders and the state’s congressional delegation, she 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.”

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