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US House passes bill to boost chip manufacturing and R&D

Draft law enters final stages, proposes $52bn injection

On Friday the US House of Representatives passed a bill that will to equip America to boost semiconductor production and lift its economy to better compete better with China.

The law bill, called America Competes Act of 2022, includes $52bn in funding to help semiconductor companies build new factories, and to fund research and development.

The draft legislation also earmarks $45bn in funding to boost the supply chain and alleviate problems related to chip shortages, which have hit key sectors, such as consumer electronics and automotive.

The next step is reconciliation with the US Senate's version of the bill, the US Innovation and Competition Act, which passed in last June, before final passage.

In a statement on Friday, US President Joe Biden said, "I look forward to the House and Senate quickly coming together to find a path forward and putting a bill on my desk as soon as possible for my signature. America can’t afford to wait."

Biden had been urging the House to pass the bill, last week saying that it will bring manufacturing jobs back the US, and ease semiconductor supply chain bottlenecks, and "create good-paying jobs for all Americans."

But the House passage of the America Competes Act was a one-sided affair with the vote split 222-210 along party lines, with support from Democrats, and Republicans opposing it.

Chip makers, especially Intel and Samsung, have been vocal about quick passage and reconciliation of the House and Senate bills. Both the companies are building new factories – Intel is spending $20bn for fabs in Ohio, and Samsung $17bn in Texas – and see the semiconductor funding as incentivizing their investments.

In a tweet on Friday, Intel CEO Pat Gelsinger lauded progression of the act. In an earnings call last week, Gelsinger said he had spoken at length on the topic with House Speaker Nancy Pelosi (D-CA) ahead of the floor debate, adding, "I'd say everybody is now more optimistic on this coming across the line in the near future."

In a tweet on Friday, Pelosi said the act "helps to address supply chain disruptions while creating good-paying union jobs for American families with $52bn in investments in facilities and equipment to produce American-made semiconductor chips."

House Minority Leader Kevin McCarthy (R-CA) earlier this week criticized the bill as not being tough enough on China, bringing up that the Middle Kingdom was where COVID-19 originated, and that throwing billions of dollars at the chip world would negatively impact the US economy and further raise prices of products.

But the semiconductor industry is happy.

“We urge leaders in the House and Senate to work together promptly on a bipartisan, bicameral competitiveness bill ... that can be passed by both chambers and signed into law by the president. Getting this legislation across the finish line will help strengthen US chip production and innovation for many years to come,” said John Neuffer, president and CEO of chip consortium Semiconductor Industry Association, in a statement.

The United States today has only a 12 per cent share of the global semiconductor manufacturing capacity, decreasing from 37 per cent in 1990, largely due to substantial government incentives, according to SIA. US investment in semiconductor research has been flat as a share of GDP, while other countries have boosted research initiatives to strengthen semiconductor capabilities.

The bill ensures access of grants for equipment and materials suppliers, which will strengthen the semiconductor supply chain in the US and attract new manufacturing facilities, said Ajit Manocha, president and CEO of SEMI, in a statement to The Register. SEMI represents semiconductor organizations worldwide.

"The bill will also bolster workforce development programs, helping to equip workers with the skills needed in today’s semiconductor industry. We look forward to working with Congress and the Biden Administration to enact this funding into law,” Manocha said. ®

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