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Senate Passes $280B CHIPS Act to Strengthen Domestic Semiconductor Chip Manufacturing

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The Senate on Wednesday passed a bipartisan bill that aims to revitalize domestic semiconductor manufacturing and reestablish the United States as a competitor in the intensifying microelectronics race.

The $280 billion “CHIPS and Science Act,” which passed in a 64-33 vote, would provide $52 billion in subsidies to U.S. semiconductor chip manufacturers and incentivize the construction of new fabrication plants across the country.

In a statement on Wednesday, President Biden said of the CHIPS Act, “It will accelerate the manufacturing of semiconductors in America, lowering prices on everything from cars to dishwashers. It also will create jobs – good-paying jobs right here in the United States.”

The bill also includes funding that would establish regional technology hubs, support start-up programs and expand the work of the National Science Foundation.

Semiconductor chips power a myriad of consumer electronics from cell phones to automobiles to Internet of Things-connected appliances. Importantly, they are also critical to most military weapons, systems and capabilities. These chips also lay the foundation for advancements in areas like artificial intelligence and quantum computing, which have been identified by the Department of Defense as critical technologies.

However, supply chain challenges, a sharp uptick in demand for consumer electronics and a decline in manufacturing have resulted in a global shortage of semiconductor chips.

The urgency behind passing the CHIPS Act also stems from national security concerns. In recent decades, the U.S. share of global semiconductor manufacturing output has dropped from 40 percent to 12 percent since 1990, according to Commerce Secretary Gina Raimondo. Today, the U.S. relies heavily on Taiwan for its semiconductor chips.

Lawmakers expect that passing the CHIPS Act will help to decrease reliance on overseas manufacturers and reestablish the United States’ competitive advantage in what is becoming a cornerstone industry for national and economic security.

Biden said the CHIPS Act “will mean more resilient American supply chains, so we are never so reliant on foreign countries for the critical technologies that we need for American consumers and national security.”

The CHIPS Act will now move to the House for a vote. Lawmakers hope to pass the bill before the Congressional recess in early August.