President Joe Biden signed legislation on August 9 that will provide billions of dollars to boost domestic semiconductor research, development, and production to help navigate a global shortage of microchips. Government Fleet first reported on the bipartisan bill late last month.
The CHIPS and Science Act or "CHIPS-plus" earmarks $52 billion in government subsidies for U.S. semiconductor research, design and production, including $2 billion for "legacy chips" used by automakers and parts suppliers. The legislation will to counter semiconductor production in China, Biden said.
The legislation also includes a 25% tax credit for investments in semiconductor manufacturing through 2026 and invests billions in science and technology innovation to strengthen economic growth, job creation and national security.
The shortage of chips has caused U.S. automakers to trim production by 1.5 million vehicles and has led to a critical shortage of new vehicle inventories.
The Biden Administration said that multiple companies, “spurred” by the chips bill, have announced more than $44 billion in new semiconductor manufacturing investments, according to NBC. Of that, $40 billion will come from Micron’s investment in memory chip manufacturing. The company’s initiative will create 8,000 new jobs and boost the U.S. market share of memory chip production to 10%, up from 2%, according to the White House. A partnership between Qualcomm and GlobalFoundries includes $4.2 billion in chip production as part of an expansion of GlobalFoundries’ upstate New York facility.
The U.S. produces only about 10% of the world's supply of semiconductors; East Asia accounts for 75% of global production, including most of the top-tier chips. That's according to the White House.
The Senate passed the legislation on a 64-33 vote. The U.S. House of Representatives passed the bill with a 243-187 vote, with one Democrat, Rep. Sara Jacobs of California, whose family founded the Qualcomm telecom company, voting present, according to CNN.
This bill represents a trimmed-down version of previous legislation to address the global semiconductor shortage and other supply chain disruptions. The earlier legislation also sought to improve U.S. competitiveness with countries such as China, Taiwan and South Korea, as well as the European Union.
Funding for CHIPS (Creating Helpful Incentives to Produce Semiconductors for America) Act was part of the U.S. Innovation and Competition Act passed in 2021.
The legislation has been slammed by some critics, including Sen. Bernie Sanders, who calls it a "blank check to the microchip industry."
Republican Sen. Pat Toomey, of Pennsylvania, has referred to the bill as a "corporate welfare handout" to "an extremely sophisticated, profitable industry in the U.S. — semiconductor manufacturing."
"Other countries are taking aggressive steps to get ahead of the United States on semiconductor production. By investing in American-made chips today, our country will be in greater control of its own destiny tomorrow — not to mention less reliant on foreign suppliers and governments," alliance CEO John Bozzella previously told Automotive News.
In June, major automakers and industry suppliers urged Congress to quickly pass bipartisan competitiveness legislation that included the CHIPS Act.
“There is not a single supply-chain shortage with a greater impact on the U.S. economy than the shortage of automotive-grade semiconductors,” the American Automotive Policy Council previously said in a statement.
On the day of the bill signing, the Biden Administration announced the launch of of a sector-specific interagency expert working group on permitting and permitting-related project delivery issues for high-tech manufacturing