US Congress passes Chips Act to boost semiconductor production and pour billions of dollars into chip fight against China

The long-awaited CHIPS and SCIENCE Act, aimed at expanding semiconductor manufacturing in the United States, passed the House 243-187, with no Democrats voting against the bill.

The bill is now headed to the White House, where US President Joe Biden will sign it. The bill is expected to help the U.S. compete against China, pumping billions into domestic semiconductor manufacturing.

Biden, on July 26, wrote on Twitter: “Semiconductor chips are the cornerstone of the modern economy – they power our smartphones and cars. And for years, manufacturing was sent overseas. American jobs and our economy. Sake, we should make them at home. The Chips for Americans Act would accomplish that.

Some Republicans who oppose the bill claim it lacks “depth” to prevent any funds from going into China’s hands, while other critics say the U.S. is currently in an Asian-dominated market. Competing will require spending billions more. Manufacturers

However, supporters of the bill argue that the U.S. economy and national security require them to produce more chips, which are increasingly important in a wide range of products such as consumer electronics, autos, medical devices and weapons systems. There are ingredients.

For example, the Semiconductor Industry Association (SIA) has highlighted key facts about how the CHIPS Act will help the country. It states that semiconductors are critical not only to the U.S. economy, but also to the nation’s national security and technology leadership.

Further explaining why the Act is important, SIA said semiconductors enable critical technologies that drive the future economy and national security such as AI, 5G/6G, quantum computing, cloud services, etc.

SIA said: “The current shortage of chips highlights the critical role of semiconductors across the economy – including aerospace, automobiles, communications, defense systems, information technology, manufacturing, medical technology, and others.”

Meanwhile, NASA astronaut and Arizona Senator Mark Kelly told Fast Company that the US cannot allow China to become the world leader in semiconductor chip manufacturing.

“We used to make the best chips in the world. We made the first. These things were invented here, and we used to have about 40% of the world’s production. Now we’re at 12%. And it’s getting worse, ” he added.

Intel, which along with other U.S. chipmakers, told the U.S. Congress that if the CHIPS Act is not passed, they will move their manufacturing facilities to other nations, stands to benefit from the bill’s passage.

Intel also delayed the start of construction on its $20 billion Ohio fabrication site after an earlier iteration of the move was rejected by Congress.

Now, Intel CEO Pete Gelsinger wrote on Twitter after the vote: “This investment will shape the future of America’s leadership in semiconductor manufacturing and innovation. We’re full speed ahead to start building #IntelOhio.” Excited to grow!

Distribution of Fund

The CHIPS and SCIENCE Act, which is meant to create helpful incentives for the U.S. to produce semiconductors, includes $52.7 billion in funding for U.S. computer chip manufacturers, as well as taxes to encourage investment in chip manufacturing. Contains billions more in intervals.

According to the bill, $50.0 billion over 5 years would be allocated to the Chips for America fund. It says the funding should be used to implement the Commerce Department’s semiconductor incentives, as well as R and D and workforce development programs.

About $2 billion will go toward Microelectronics Commons, a national network for offshore, university-based prototyping, lab-to-fab transfer of semiconductor technologies, including specific applications for the Department of Defense, and the semiconductor workforce. Training of

According to the bill, $500 million in funding would be allocated to the State Department over five years, with support from the US Agency for International Development, the Export-Import Bank, and the US International Development Finance Corporation. It is expected to support international information and communication technology security and semiconductor supply chain activities, including assisting in the development and adoption of standards.

Additionally, the National Science Foundation will receive $200 million over five years to promote semiconductor workforce development. A highly skilled domestic workforce is critical to the success of new and expanded facilities built under CHIPS Act incentives.

It also includes a $39 billion fund that will help companies that expand or establish new semiconductor manufacturing facilities in the United States.

The bill also states that the semiconductor industry will need 90,000 additional people by 2025.

Sorting out the chip problem

During the height of the CoVID-19 pandemic, the supply of chips was in short supply. Factory shutdowns at the start of the outbreak halted semiconductor manufacturing in Asia, while consumer demand for automobiles and sophisticated home appliances that require chips increases during the lockdown.

The U.S. produces some of the most advanced types of semiconductors, mostly in Taiwan, which is at the center of growing political tensions with China.

So, growing semiconductor manufacturing in the U.S. appears to be easing global supply constraints for chips, as it caused major disruptions to purchases of everything from vehicles to medical equipment during the peak of the pandemic.

Senate Majority Leader Chuck Schumer (D-NY) has claimed that the financing plan could help fight inflation by making certain things cheaper.

While it’s fair to call the legislation a bipartisan victory, it’s largely focused on maintaining China’s growing investment in its domestic chip industry rather than addressing current challenges with the tech supply chain.

It should be understood that the chip factories of this package will not be finished for years and the Act alone may not be enough to spark a long-term semiconductor revolution in the US.

Especially when other countries, such as China, South Korea, and EU member states, are also ramping up chip production and investing tens of billions of dollars in the business. Additionally, India has proposed its own semiconductor mission to become a global chip manufacturing hub.

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