Senate Passes CHIPS Act With $39B for Semiconductor Plant Construction

The Senate voted July 27 to send a bill to the House of Representatives that would provide $52 billion to boost semiconductor manufacturing as manufacturers warned a delay in the funding could slow their projects to build more plants.

The amended bill, which passed by a 64-33 vote, now goes to the House, where lawmakers have pledged to vote on it before their August recess.

Known as the Chips and Science Act, the legislation would also provide $39 billion toward semiconductor chip manufacturing construction, plus tax breaks for chipmakers and billions of dollars more for research. Proponents of the bill have called it necessary for national security because of the wide range of equipment that requires the chips, from telecommunications to military. They have also said it would increase the U.S. economy’s competitiveness with China, as supply chain delays have caused chip shortages that have stifled manufacturing of some goods. 

“This Chips and Science Bill is going to create millions of good paying jobs down the road,” Senate Majority Leader Charles Schumer (D-NY) said ahead of the vote. “It will alleviate supply chains, it will help lower costs and it will protect America's national security interests.”

The Semiconductor Industry Association says the U.S. share of semiconductor manufacturing has dropped from 37% in 1990 to 12%. Chipmakers have already been moving to increase their U.S.-based production, with several plants known as “fabs” currently under construction including a pair of Intel fabs worth $20 billion in Chandler, Ariz., and Texas Instruments’ $6.5-billion fab in Sherman, Texas. Manufacturers have also announced a slate of upcoming projects to build new plants. Samsung Electronics picked Taylor, Texas, as the location for its $17-billion facility last year, and recently filed paperwork indicating it could spend nearly $200 billion on 11 plants in the state.

But some manufacturers indicated their planned fab projects could be delayed as lawmakers failed to reach an agreement on the proposed $52 billion to support chip manufacturing. The Senate passed a similar bill last year, but that stalled in the House. House lawmakers then voted on another similar bill earlier this year, but it drew criticism over the inclusion of provisions from the PRO Act, which would have impacted labor negotiations. In June, an Intel spokesperson told ENR that the start of its $20-billion manufacturing site project in Ohio could be delayed as a result of the slow negotiations in Congress, and Commerce Secretary Gina Raimondo said a $5-billion project to build a GlobalWafers fab in Sherman, Texas, could be in jeopardy if lawmakers didn’t pass the bill before the August recess.

This latest version of the legislation has drawn support from construction industry groups, including the Associated General Contractors. In a letter to senators, AGC’s vice president of government relations, James Christianson, urged them to vote “yes” on the bill, writing that the fab construction would lead to further investments to build schools, commercial buildings and infrastructure. 

“AGC not only supports the CHIPS Act because it provides $39 billion to fund the construction of these facilities, but also because these facilities will spur broader economic development and new, long-term construction jobs,” Christianson wrote. 

The bill has been criticized by some Republicans, who said it would subsidize companies that do not need assistance and potentially heighten inflation. 

“This is corporate welfare,” Sen. Mike Lee (R-Utah) said July 19. 

Sen. Bernie Sanders (I-Vt.) also criticized the funding, saying in a statement that profitable chipmakers created the shortage themselves by shutting down 780 plants over the past 20 years. 

House lawmakers have scheduled their last votes before the recess at 3 p.m. July 29. House Speaker Nancy Pelosi has said she believes she has sufficient support to pass the bill and send it to President Joe Biden for his signature.

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