Congressional Panel Weighs Bill to Boost U.S. Chip Production

A major piece of legislation aimed at rebuilding and expanding the semiconductors business in the U.S. has passed both houses of Congress and awaits action by a conference committee that could move it toward final passage and President Joe Biden’s signature. 

Enactment of the bill would be a major victory for companies such as Intel, which has promised to make chips in the U.S., and for the auto industry, which has actively promoted the idea of making more semiconductors in the U.S. to circumvent the shortages that have hobbled production for months.  

“American automakers Ford Motor Company, General Motors and Stellantis applauded House passage of semiconductor incentive funding contained in the America Competes Act and urged the House and Senate to quickly work out differences on legislative efforts to grow U.S. production of semiconductors,” says the American Automobile Policy Council, a lobbying group representing the three domestic car companies. 

“House passage of CHIPS (Creating Helpful Incentives to Produce Semiconductors for America) Act funding moves the U.S. one step closer to strengthening American semiconductor production,” AAPC President Matt Blunt says.

“No other U.S. industry has been as severely impacted by the shortage of semiconductors as the automotive industry and its workforce,” says Blunt, a former Missouri governor. “It is vital that American automakers and the U.S. manufacturing supply chain have uninterrupted access to semiconductors, which are essential for automotive manufacturing. 

“American automakers urge the House and Senate to quickly work out differences on this legislation to expand U.S. semiconductor production,” he says. 

Chevrolet Silverado trim line (Chevrolet)

Rep. Debbie Dingell (D-MI), a close ally of Detroit’s automakers, notes: “This bill is critical to bringing our supply chain home to the United States. It’s going to return jobs and create new ones, boost manufacturing and address the semiconductor chip shortage, and protect our national security. 

“In the heart of Southeast Michigan, we’ve seen too many of our neighbors laid off because plants are idled. We’ve seen car prices skyrocket,” says Dingell, a major proponent of the bill. “If we fail to act, we put our economic security and our national security at risk.”

Meanwhile, Intel has promised to build a $20 billion semiconductor plant outside Columbus, OH, to help supply chips to American manufacturers in automotive and other industries. Ohio is expected to put up $600 million to help pay for the project but Intel also is expecting some help from the federal government. 

The legislation now in conference committee stems from the growing high-tech competition between the U.S. and China. Concerns about a potential invasion by China of Taiwan, a major source of some of the most sophisticated semiconductors, also was critical in passage of the bills in both the Senate and House. 

But significant differences remain: The House bill, which only one Republican supported, would cost $350 million while the price tag on Senate bill is about $250 million. 

An analysis of the legislation by the American Institute of Physics (AIP) says the House and Senate bills differ in several other ways.

The House measure includes provisions that would offer more green cards to immigrants with advanced degrees in science, technology and medicine. The House bill, which has come under attack from Republicans, also includes more funding for other parts of the industrial supply chain beyond semiconductors as well as money to study and fight climate change overseas. 

The Senate bill also takes a tougher line on competition with China, according to the AIP analysis.

The House version is not as explicitly aimed at China out of deference to lawmakers belonging to the Congressional Asian Pacific American Caucus. 

Before the House vote on the bill, the caucus chair, Rep. Judy Chu, (D-CA), sent a letter to colleagues warning that reliance on a “fear of China to make our case” would encourage xenophobia, according to The Hill, a news source dedicated to activity on Capitol Hill.