President Joe Biden on Tuesday will sign into law a $280 billion bill aimed at boosting domestic semiconductor production and funding science and technology research, a measure that advocates say is crucial to ease supply chain disruptions, bolster national security and increase competitiveness with China.
The measure contains $52.7 billion in subsidies to boost domestic semiconductor production, along with a 25% tax incentive for investments in domestic chip investments worth roughly $24 billion.
It also contains $200 billion for federally backed scientific research, $1.5 billion for the development of “open-architecture, software-based wireless technologies” and $11 billion for the Commerce Department to establish “regional technology hubs” nationwide.
The bill passed the Senate last month in a 64-33, with seventeen Republicans joining Democrats in support of the measure. The bill also passed the House in a similarly bipartisan fashion, 243-187, with one Democrat, Rep. Sara Jacobs, D-Calif., voting “present.” (Jacobs’ grandfather founded Qualcomm, which manufactures semiconductors.)
The measure also includes “guardrails to ensure that companies receiving tax payer dollars invest in America and that union workers are building new manufacturing plants across the country,” President Joe Biden said in a statement after the bill’s passage.
The bill is the latest in a series of legislative victories for President Biden and Congressional Democrats in recent weeks, including the Inflation Reduction Act, a sweeping climate change, health care and tax package.
Among those set to attend the White House Rose Garden ceremony on Tuesday include Intel CEO Pat Gelsinger, Lockheed Martin CEO Jim Taiclet and HP CEO Enrique Lores, as well as local and state officials from Illinois, Pennsylvania, Ohio, Michigan and Texas, according to a White House official.
A number of major companies have announced plans to build semiconductor manufacturing plants in the United States, including, according to the White House:
- Samsung, which is set to invest $17 billion to build a new semiconductor facility in Taylor, Texas;
- Panasonic Energy, which announced plans to invest $4 billion and create 4,000 jobs in a lithium-ion battery factory in De Soto, Kansas;
- Stellantis and Samsung, which announced a $2.5 billion joint venture to manufacture batteries in Kokomo, Indiana;
- Intel’s $20 billion fab outside Columbus, Ohio;
- Texas Instruments investing up to $30 billion in Texas;
- Wolfspeed’s $1 billion expansion in North Carolina
- Expansions by Global Foundries and SK Group
Advocates cheered the bill’s passage, calling it crucial for economic prosperity and national security.
“One-third of the core inflation last year in 2021 — one-third of it — was due to the high price of automobiles,” President Biden said at a meeting with CEOs and labor leaders last month. “You know why that’s driven? That’s driven by an inability to manufacture more automobiles. Why? The shortage of semiconductors.”
“America invented semiconductors, but over the years, we let the manufacturing of those semiconductors get sent overseas,” Biden added. “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.”
“We source all of our high-end computer chips, mostly from Taiwan, some from South Korea,” Sen. Todd Young, R-Ind., one of the bill’s biggest backers in the Republican caucus, said on CNBC last month. “And we just can’t be that dependent on a country so far away from the continental United States for our missile system chips [and] for the components that go into our radars and our aircraft.”
Some of the bill’s opponents – including progressive Sen. Bernie Sanders, I-Vt., and House Republican Leader Kevin McCarthy, R-Calif., have blasted it as a “blank check” or “corporate welfare” for the semiconductor industry.
