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WASHINGTON (Reuters) -The U.S. Senate is due to vote later on Tuesday on a slimmed-down version of legislation to provide $52 billion in subsidies and tax credits for the computer chip industry, over a year after passing its first version of a bill boosting semiconductor competition with China.
The bill is part of U.S. efforts to address an industry-wide chip shortage that has disrupted production in the automotive and electronics industries, forcing some firms to scale back production.
Senate aides said the bill would include a new, four-year 25% tax credit to encourage companies to build plants in the United States in response to growing calls to decrease reliance on other countries for semiconductors.
The Senate’s Democratic majority leader, Chuck Schumer, announced that a first procedural vote would take place on Tuesday, calling U.S. semiconductor manufacturing a matter of national security as well as a source of jobs.
Senate aides said the goal is to pass the bill early next week. They would then send the bill to the House of Representatives, whose approval would then send it to the White House for President Joe Biden to sign into law.
“The message is not subtle: If companies do not think it is profitable to make chips here in America, they are going to go somewhere else,” Schumer said as he opened the Senate on Monday.
Many major weapons also require sophisticated computer chips. Javelin missile systems made by Raytheon Technologies (NYSE:RTX) and Lockheed Martin Corp (NYSE:LMT) each contain 250 microprocessors. These systems have been in high demand by Ukrainian soldiers as they work to repel the Russian invasion of Ukraine.
INTEL EXPANSION PLANS
Intel Corp (NASDAQ:INTC) said in January it would spend $20 billion on a factory in Ohio after breaking ground on two new plants in Arizona last year. That could grow to $100 billion with eight total fabrication plants and would be the largest investment on record in Ohio, Intel Chief Executive Pat Gelsinger said in January.
However, he added that without government funding, “it’s just not going to happen as fast and it’s not going to grow as big as quickly.”
Administration officials urged lawmakers last week to pass the bill, citing among other issues concerns about national security.
The current bill is a pared-down version of rival bills in the Senate and House of Representatives that stalled before becoming law, even though support for improved competition with China is one of the few areas of agreement between Biden’s Democrats and Republicans.
The Senate approved a bipartisan $250 billion bill boosting spending on technology research and development in June 2021, one of the first major pieces of legislation passed after Democrats gained their slim control of the chamber.
However, the legislation was never taken up in the Democratic-controlled House, which earlier this year passed its own bill with almost no Republican support. That measure included provisions to boost chipmakers, but also billions of dollars for other supply chains and the Global Climate Change Initiative, which Republicans oppose.
Urged by the administration to do something, lawmakers recently began working more urgently on the slimmed-down legislation focused on semiconductors.
