Bill to boost semiconductor industry passes key Senate test

WASHINGTON (AP) — The Senate on Tuesday advanced a $280 billion bill designed to boost the semiconductor industry in the United States and to accelerate high tech research that backers say will be critical to the economy in future decades.

The Senate needed 60 votes to advance the bill and the vote was 64-32. The legislation is now on a glidepath to final passage in the Senate, likely on Wednesday. The House is also expected to take up the package this week.

The White House has led support for the bill, along with industry leaders who say government subsidies are necessary to compete with other nations that are also spending billions of dollars to lure manufacturers. They say the pandemic has exposed the dangers to the economy and to national security of relying too heavily on foreign-made computer chips.

The bill provides about $52 billion in grants and other incentives for the semiconductor industry as well as a 25% tax credit for those companies that build chip plants, or fabs, in the U.S. The cost of the tax break is projected to be about about $24 billion over 10 years. The bill also authorizes about $200 billion to enhance scientific research over the same timeframe.

The bill attracted support from lawmakers in both parties who say the investment is critical to U.S. innovation and staying ahead of economic rivals in coming decades, namely China.

“I firmly believe that passing this bill will be a turning point for American leadership in this century,” said Senate Majority Leader Chuck Schumer, D-N.Y. “The benefits of this legislation will reverberate across the country for years and decades to come.”

The Congressional Budget Office has projected that the bill would increase deficits by about $79 billion over 10 years. Critics have objected to the spending called for in the bill either as misplaced or excessive.

“At a time when the working families of this country are falling further and further behind while the very rich are getting much richer, let us get our priorities right,” said Sen. Bernie Sanders, I-Vt.

Senate Republican leader Mitch McConnell led a group of 17 Republicans senators who voted to limit debate and advance the bill. While some Republicans have voiced concerns about the spending in the bill, others have emphasized the need to address national security vulnerabilities resulting from the U.S. reliance on plants in Taiwan and South Korea for the most advanced computer chips.

“We are not used to providing these kinds of financial incentives to businesses, but when it costs 30 percent less to build these manufacturing facilities across the seas in Asia and our access to that supply chain is potentially jeopardized by very real threats, it is a necessary investment for us to make,” said Sen. John Cornyn, R-Texas.

Schumer said in an interview with The Associated Press that without the federal government making an investment in chip manufacturing and scientific research, “our economy would fade and the prospects of good paying jobs in America would shrink.”

“It’s not chatted about like some other things that are more immediate, but this is going to change America for the better in a very real way and be regarded as a turning point where America said, ‘We can compete and we can win,’ instead of running away,” Schumer said.