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House passes bill to subsidize U.S.-made semiconductor chips in win for Biden

Semiconductors are imprinted onto silicone wafers at a GlobalFoundries facility in Malta, N.Y., in 2021. (Cindy Schultz for The Washington Post)

The House on Thursday voted to pass the $280 billion Chips and Science Act, a bill that would subsidize domestic semiconductor manufacturing and 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 House passed the legislation on a 243-187 vote, with strong bipartisan support — despite a last-minute push by House GOP leaders to whip against the bill. Twenty-four Republicans defied the leadership and joined Democrats in backing the measure.

President Biden hailed the outcome after securing bipartisan support last year for a major infrastructure bill and recently for a measure to reduce gun violence, overcoming election-year partisanship.

Biden said the bill is “exactly what we need to be doing to grow our economy right now.”

“Today, the House passed a bill that will make cars cheaper, appliances cheaper, and computers cheaper,” Biden said in a statement. “It will lower the costs of everyday goods. And, it will create high-paying manufacturing jobs across the country and strengthen U.S. leadership in the industries of the future at the same time.”

The Senate had passed the bill Wednesday in a 64-33 vote. Days earlier, House Speaker Nancy Pelosi (D-Calif.) had said there would be bipartisan support for the bill’s passage in the House and vowed to send it to Biden’s desk as soon as possible. At the time, House Republican leaders had planned to let their rank and file vote their conscience on the bill.

However, after the stunning news Wednesday night of a deal between Sen. Joe Manchin III (D-W.Va.) and Democratic leaders on a separate climate, health-care and taxes bill, House GOP leaders urged members to oppose the chips bill as retribution, in an effort to deny Biden and Senate Majority Leader Charles E. Schumer (D-N.Y.) a legislative win.

Before the House GOP decided to whip against the chips bill, proponents of the legislation thought they could garner a sizable amount of Republican support, according to people familiar with the vote counts who spoke on the condition of anonymity to freely discuss the matter. Rep. Michael McCaul (R-Tex.), the ranking Republican on the House Foreign Affairs Committee, told reporters that he would still support the bill, calling it a national security issue.

Others, however, said they would toe the party line. Rep. Frank D. Lucas (R-Okla.), the ranking GOP member on the House Science, Space and Technology Committee, said he expected his remarks on the bill would be very different “just 24 hours ago.” Lucas noted he had worked on the chips-funding legislation for more than three years, and lamented that it was now “irrevocably tied to a massive tax hike and spending spree,” referring to the Democrats’ tax bill.

“Regrettably, and it’s more regrettably than you can possibly imagine, I will not be casting my vote for the CHIPS and Science Act today,” Lucas said. “I want to emphasize that this is in no way a reflection of my feeling about the transformational research policies in this bill.”

Some members of the Congressional Progressive Caucus were also squeamish on the bill — Sen. Bernie Sanders (I-Vt.) has been publicly critical and voted against it Wednesday — and there was fear that its passage in the House could be threatened if supporting lawmakers dwindled. Commerce Secretary Gina Raimondo met with the caucus virtually Thursday afternoon to provide reassurances about guardrails included in the legislation.

According to two sources familiar with the meeting, Raimondo appealed to liberals by emphasizing to the group that she understood their concerns and would use tools at her disposal to ensure that funding in the legislation is not used to enrich big companies. She promised to instead invest in American jobs and minority-owned businesses, while telling liberals it was time to step up and support the president.

Raimondo spent the past 24 hours working the phones to ensure significant GOP support was not lost after Senate Republicans tried to derail its passage, reminding lawmakers about the national security implications if it did not pass Thursday.

On the House floor Thursday, Minority Leader Kevin McCarthy (R-Calif.) slammed the legislation as a “$280 billion blank check” to the semiconductor industry, saying he had always opposed it. Rep. Guy Reschenthaler (R-Pa.) criticized the bill as one that would benefit only “a single industry,” and several GOP lawmakers urged their colleagues to vote no.

Rep. Joseph Morelle (D-N.Y.) countered by saying there were few industries that did not utilize semiconductor chips.

“Chips run everything. So whether it’s your cellphone, your laptop, your automobile, it really doesn’t matter. Children’s toys have chips in them,” Morelle said. “And the fact is we have lost our competitive edge. … This isn’t about a single industry. It’s about every industry.”

Later, Morelle read aloud on the House floor praise for the legislation — from Senate Republicans who had voted to pass it just the day before.

About $52 billion will go to microchip manufacturers to incentivize construction of domestic semiconductor fabrication plants — or “fabs” — to make the chips, which are used in a wide variety of products, including motor vehicles, cellphones, medical equipment and military weapons. A shortage of semiconductor chips during the coronavirus pandemic has caused price hikes and supply-chain disruptions in several industries.

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.

In a White House meeting with business and labor leaders Monday, Raimondo noted 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 invested “nearly nothing” in semiconductor manufacturing, while China has invested $150 billion to build its domestic capacity, Raimondo said. She also said it was critical for the United States to be able to compete with countries that have been providing subsidies to semiconductor companies to build factories.

“The chips funding will be the deciding factor on where those companies choose to expand,” Raimondo said. “We want them, we need them, to expand here in the United States.”

Included in the legislation are provisions that would prohibit companies from building most types of new semiconductor manufacturing facilities in China “or any other foreign country of concern” for a decade after receiving federal funding.

Paul Kane and Jeanne Whalen contributed to this report.