US Senate to vote on China semiconductor bill to increase competitiveness, boost industry
- The slimmed down legislation, which seeks to boost the American chip industry and increase US competitiveness, is expected to include US$52 billion in subsidies
- The bill text includes a provision that would bar companies receiving assistance from US government from expansion of manufacturing capacity in China
Democratic Majority Leader Chuck Schumer said the US Senate would begin voting on Tuesday on legislation to boost the US semiconductor industry and improve competitiveness with Beijing, including restricting some firms from expanding manufacturing capacity in China.
“We need to move quickly,” he said on Monday as the Senate opened for the week.
The legislation is a slimmed-down version of a bill that members of Congress have been working on for well over a year, expected to include US$52 billion in subsidies for the industry and a tax credit for companies that manufacture semiconductors in the United States.
“Without these incentives from Congress, the capital investment required for expanding production is not economically viable in the United States, given other global alternatives,” Schumer said.
Lawmakers hope to pass the legislation and send it to the White House for President Joe Biden to sign into law before they leave Washington for their annual August recess.
In addition to the chips money, a draft bill circulated by Senate leadership also includes a handful of measures with broad bipartisan support. Among them are US$500 million for an international secure communications programme, US$200 million for worker training and US$1.5 billion for public wireless supply chain innovation, according to a copy of the text obtained by Bloomberg.
China’s supply chain ‘irreplaceable’, says contract maker of Xiaomi smartphones
The bill is a drastically scaled back version of the US Innovation and Competition Act that passed the Senate last year based on legislation originally introduced by Schumer and Indiana Republican Todd Young.
It primarily consists of the semiconductor funding introduced by Democratic Senators Mark Kelly and Mark Warner and Republicans John Cornyn and Tom Cotton.
Cornyn, who last week backed Republican leader Mitch McConnell’s threat to withhold support for a more expansive version of the legislation while Democrats pursued a party-line tax and climate bill, tweeted Sunday that the problem was “solved” after Democrat Senator Joe Manchin effectively blocked action on the biggest parts of that legislation.
Missouri Senator Roy Blunt, a member of the Republican leadership, said Monday that he expects Republicans will support moving forward with debating the legislation as long as Democrats do not try to restore additional pieces of the original legislation.
06:01
There’s a global semiconductor shortage and this is why it matters
The bill text also includes a provision that would bar companies who receive assistance from the US government from any “material expansion of semiconductor manufacturing capacity in the People’s Republic of China” or another foreign country of concern for 10 years after the award date.
The semiconductor incentives have been a top priority for the Biden administration as well as chip manufacturers such as Intel Corp. and companies that are heavy users of chips. While the global semiconductor shortage has eased somewhat, there is still limited production for certain chips used in cars and home appliances.
Reuters and Bloomberg
