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Jacob Fromer

The US House of Representatives gave a final stamp of approval on billions of dollars in new funding for the US semiconductor industry on Thursday, putting a key component of Washington’s efforts to out-compete China on the verge of becoming law.
The House passage came just one day after the Senate cleared the bill on Wednesday with a bipartisan vote of 64-33. The House vote was 243 to 187, with 24 Republicans voting in favour and one Democrat voting “present”.
The legislation, known as the Chips and Science Act, will now go to US President Joe Biden’s desk to be signed into law.
“The Chips and Science Act is exactly what we need to be doing to grow our economy right now,” Biden said in a statement after the vote. “By making more semiconductors in the United States, this bill will increase domestic manufacturing and lower costs for families. And, it will strengthen our national security by making us less dependent on foreign sources of semiconductors.”


The bill includes more than US$52 billion in funding for semiconductor manufacturing and research, a vital technology in everything from military weapons to family cars, which the Biden administration has singled out as an urgent priority in US competition with Beijing.
The White House has said that a global chip shortage has played a role in causing high inflation in the US, and earlier this week, a senior Pentagon official called semiconductors “ground zero of our tech competition with China”.
The bill’s authors and the White House have also said that the funding includes guardrails to prevent companies from taking their federal money and using it to invest instead in countries like China, although some critics have warned that those protections may not go far enough to block corporations from doing it anyway.
The funding includes US$39 billion for semiconductor manufacturing in the United States and another US$11 billion for chip research and development.
Washington – and Arizona – dangle subsidies as US chip-making business returns
Another US$1.5 billion, the bill’s authors said, goes to “shore up the global telecommunications supply chain and limit the scope of involvement globally of telecommunication companies with close ties to the Communist Party of China, like Huawei”.
This funding comes amid recent reports that Washington has been investigating possible spying activities by Huawei Technologies, the Chinese telecoms giant, of US military installations on behalf of Beijing – allegations Huawei and the Chinese government have denied.
American telecoms companies had already been ordered by the US government to “rip and replace” any equipment they are using made by Huawei or ZTE, another Chinese telecoms supplier, but carriers have said they still haven’t received enough money from Washington to do it.
The bill could also lead to potentially billions of dollars for hi-tech scientific research and education, two areas where Biden has said the US is lagging dangerously behind China.

Congress would have to pass separate legislation to fund those research and education programmes.
Representative Michael McCaul, an original sponsor of the bill and the top Republican on the House Foreign Affairs Committee, wrote on Thursday that the competition with Beijing over semiconductors had become a new “Sputnik moment” for the US, and that Washington had no choice but to respond.
“Imagine the global catastrophe that would ensue if we became dependent on China for these chips, which are found in advanced weapon systems, aircraft and other critical defence industry applications,” he wrote in an op-ed published by Fox News. “We cannot allow this to happen.”


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US-China relations

US House approves Chips Act to subsidise and speed up semiconductor production

The bill will provide US$52 billion in federal subsidies for the domestic production of microchips. Photo: Shutterstock

The US House of Representatives passed the Chips Act on Thursday. The bill will now go to President Joe Biden for his signature.

Representative Michael McCaul, a Republican from Texas, was an original sponsor of the bill that passed on Thursday. Photo: EPA-EFE

US Senate passes bill providing US$52 billion in subsidies to semiconductor industry

US President Joe Biden speaks virtually during an event in the White House complex on Monday to promote the CHIPS Act, which will bolster domestic semiconductor manufacturing. On Wednesday, the Senate passed the bill, which now heads to the House of Representatives. Photo: AP

Senate Majority Leader Charles Schumer, an original sponsor of the bill, said without the bill “our rivals, chief among them the Chinese Communist Party, would likely beat us to the punch”. Photo: Getty Images/AFP

Representative Michael McCaul, Republican of Texas, is part of the bipartisan push for the CHIPS Act. Photo: EPA-EFE

Senate ‘test vote’ shows support for bill providing $52 billion to US semiconductor industry to out-compete China

US Senate Majority Leader Chuck Schumer addressing reporters in Washington on Tuesday. The New York Democrat says passing the semiconductor bill is crucial to solving America’s chip shortage. Photo: AP

US Senate to vote on China semiconductor bill to increase competitiveness, boost industry

The bill text 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. Photo: Shutterstock

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President Joe Biden has said he will sign the bill, which as seen as essential in helping the US become more self-reliant as it competes with China
A shortage of microchips and worries about the supply chain and national security lead to bipartisan support for the measure



President Joe Biden has said he will sign the bill, which as seen as essential in helping the US become more self-reliant as it competes with China.
