US Senate passes CHIPS Act to boost microchip production

The United States Senate has approved a bipartisan bill by a vote of 64-33 that would provide $52 billion in subsidies to domestic semiconductor manufacturers. The $280 billion bill includes federal grants and tax breaks for companies that construct chip facilities in the country.  

The bill now goes to the House of Representatives for passage, though it is unclear if it will pass before the August recess.  

The bill’s full name is the Creating Helpful Incentives to Produce Semiconductors for America Act. According to its language, companies in the semiconductor industry will receive $52 billion in grants and other incentives and a 25 percent tax credit for those companies that build chip plants in the U.S. The chips could be used for vehicles, robotics and computers. Additionally, the bill gives about $200 billion to enhance scientific research.   

“[The CHIPS Act] will accelerate the manufacturing of semiconductors in America, lowering prices on everything from cars to dishwashers,” President Joseph Biden says in a statement. “It also will create jobs – good-paying jobs right here in the United States. It will mean more resilient American supply chains, so we are never so reliant on foreign countries for the critical technologies that we need for American consumers and national security.”  

If the bill is passed by the House and signed by Biden, it would boost current semiconductor projects in the country. Technology manufacturer Intel, Santa Clara, California, has said if the act passes, it will increase the spending on its microchip facility in Licking County, Ohio, from $20 billion to $100 billion.  

The bill has garnered support from associations like the National Waste Recycling Association (NWRA). Recently, the organization signed a letter with 10 other organizations urging congress to consider the act.   

“Technology in the waste industry is rapidly advancing,” says NWRA President and CEO Darrell Smith. ”Our member companies depend on a reliable supply of computer chips for trucks and other equipment. We urge Congress to pass this important legislation quickly.”  

The letter says semiconductors are essential to nearly every sector of the economy, including waste and recycling, aerospace, automobiles, communications, clean energy, information technology and medical devices. Unfortunately, demand for semiconductors has outstripped supply, partly because of shifts arising from the COVID-19 pandemic.   

The NWRA says this has created a global chip shortage and resulted in backlogs for orders of new waste and recycling industry vehicles and equipment. The lost growth and jobs across all industries resulting from the shortage have underscored the need for increased domestic manufacturing capacity that this legislation seeks to address.  

Despite this, some opponents of the bill, such as Sen. Bernie Sanders, have accused the bill of being a financial “grab bag” for technology companies. The bill is projected to increase federal deficits by about $79 billion over 10 years.