House passes $280 billion package to boost chip production in the U.S.

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The House on Thursday passed a $280 billion package to boost the semiconductor industry and scientific research in a bid to create more high-tech jobs in the United States and help it better compete with international rivals, namely China.

The House approved the bill by a solid margin of 243-187, sending the measure to President Joe Biden to be signed into law and providing the White House with a major domestic policy victory. About two-dozen Republicans voted for the legislation.

“My plea is put politics aside. Get it done,” Biden said before the vote, adding it would give the U.S. “the ability not only to compete with China for the future, but to lead the world and win the economic competition of the 21st century.”

Republicans argued the government should not spend billions to subsidize the semiconductor industry and GOP leadership in the House recommended a vote against the bill, telling members the plan would provide enormous subsidies and tax credits “to a specific industry that does not need additional government handouts.”

Rep. Guy Reschenthaler, R-Pa., said the way to help the industry would be through tax cuts and easing federal regulations, “not by picking winners and losers” with subsidies—an approach that Rep. Joseph Morelle, D-N.Y., said was too narrow.

“This affects every industry in the United States,” Morelle said. “Take, for example, General Motors announcing they have 95,000 automobiles awaiting chips. So, you want to increase the supply of goods to people and help bring down inflation? This is about increasing the supply of goods all over the United States in every single industry.”

Some Republicans viewed passing the legislation as important for national security. Rep. Mike McCaul, the top Republican on the House Foreign Affairs Committee, said it was critical to protect semiconductor capacity in the U.S., which he said was too reliant on Taiwan for the most advanced chips. That could prove to be a major vulnerability should China try to take over the self-governing island that Beijing views as a breakaway province

“I’ve got a unique insight in this. I get the classified briefing. Not all these members do,” McCaul said. “This is vitally important for our national security.”

The bill provides more than $52 billion in grants and other incentives for the semiconductor industry as well as a 25% tax credit for those companies that invest in chip plants in the U.S. It calls for increased spending on various research programs that would total about $200 billion over 10 years, according to the Congressional Budget Office.

A late development in the Senate—progress announced by Wednesday night by Democrats on a $739 billion health and climate change package—threatened to make it harder for supporters to get the semiconductor bill over the finish line, based on concerns about government spending.

Rep. Frank Lucas, R-Okla., said he was “disgusted” by the turn of events on Capitol Hill.

Despite bipartisan support for the research initiatives, “regrettably, and it’s more regrettably than you can possibly imagine, I will not be casting my vote for the chips and science act today.”

—Associated Press writer Zeke Miller contributed to this report.