US President Joe Biden will sign a bill next Tuesday to subsidize the US semiconductor industry and boost efforts to make the United States more competitive with China, the White House said on Wednesday. The law aims to address the persistent shortage that has affected everything from cars, weapons, washing machines and video games. Thousands of cars and trucks await chips in southeast Michigan as shortages continue to hit automakers.
A rare major effort in US industrial policy, the bill provides about $52 billion (about Rs 4,11,400 crore) in government subsidies for research and US production of semiconductors. It also includes an investment tax credit of $24 billion (about Rs 1,89,800 crore) for chip plants.
“The bill will supercharge our efforts to manufacture semiconductors in America,” Biden said on Tuesday.
The law authorizes $200 billion (about Rs 15,82,000 crore) over 10 years to boost US scientific research to better compete with China. Congress would still need to pass separate appropriations legislation to fund those investments.
China had lobbied against the semiconductor bill. The Chinese embassy in Washington said China “strongly opposed” it, reminding it of a “Cold War mentality”.
Several US lawmakers said they would generally not support huge subsidies for private businesses, but noted that China and the European Union are awarding billions to their chip companies as incentives. He also cited national security risks and huge global supply chain problems that have hampered global manufacturing.
Some Progressive lawmakers raised concerns about the size of government grants to for-profit chip companies.
The Commerce Department said on Friday it would limit the size of government subsidies for semiconductor manufacturing and would not let firms use the money to “pad their bottom line”.
Congress Progressive Caucus chair Pramila Jayapal said the group backed the legislation after lengthy talks with Commerce Secretary Gina Raimondo after the group expressed concerns that chip companies would use the funding for stock buybacks or pay dividends.
© Thomson Reuters 2022