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Semiconductor bill passes House, heads to Biden’s desk

Domestic semiconductor production would get an infusion of grant money through the $52 billion legislation.

WASHINGTON (CN) — At a time of supply chain headaches and surging prices driven by an international shortage of semiconductors, a field where China has long been the dominant player, U.S. lawmakers passed legislation to bolster domestic semiconductor manufacturing and boost American competitiveness in the technology market.

The House voted 243-187 on Thursday to pass the $280 billion Chips and Science Act, which provides $52 billion in grants for American companies to produce parts for semiconductor chips — small electronic parts used in everything from computers and cellphones to military weapons and electric cars.

A massive portion of the bill, around $100 billion, would fund five years of scientific research as well as programs for the National Science Foundation to create regional technology hubs, kickstarting technology and manufacturing work in areas of the country that do not typically attract tech investments.

The semiconductor chip was invented in the United States, but the American share of the chip production market has fallen over the past 20 years, with Asian countries including China, Taiwan and South Korea now producing the majority of the world's semiconductors.

According to the Commerce Department, the portion of semiconductors produced in the U.S. has fallen from 40% of the world's supply to around 12% over the past two decades.

"Our research has generated ground-changing discoveries. Our industry has powered unprecedented prosperity. Our technology has altered the course of history, and our workforce has been the envy of the world," House Speaker Nancy Pelosi said on the House floor. "But in recent years, many other nations have followed our blueprint. ... Their rise not only threatens America's status as a world leader in innovation, but also the economic security of America's families."

Another aspect of Thursday's bill would offer a 25% four-year tax credit for investments in semiconductor manufacturing — a $24 billion policy that is not without critics.

House Minority Leader Kevin McCarthy slammed the legislation Thursday as a "blank check" for corporate interests, mirroring similar criticisms made in the Senate by Vermont Senator Bernie Sanders, an Independent who caucuses with the Democrats.

The House and Senate had previously passed their own versions of the bill, which included $52 billion in incentives for manufacturers. Months of back-and-forth and negotiations have been underway in the interim, culminating in the Chips and Science Act now headed to President Joe Biden's desk.

The bill gained bipartisan support in the Senate, where it overcame the filibuster, garnered support from 17 Senate Republicans and passed the chamber on Wednesday.

“The Senate passed a bill that took a small, discretionary program and turned it into a $280 billion blank check, including $79 billion in mandatory spending on corporate welfare to be handed out to whoever President Biden wants," McCarthy said on the House floor.

Shocking news this week of a deal between Democratic Senator Joe Manchin and Senate Majority Leader Chuck Schumer on a massive climate and health care bill aimed at cutting the deficit led Republican leaders to whip against the semiconductor chips bill as payback.

Republican Representative Frank Lucas of Oklahoma, who voted against the bill, acknowledged his party's thinking.

"Had Democratic leadership acted in good faith, we would be having a very different discussion today," Lucas said. "After long and careful thought for what reconciliation will mean to the economy, the expanded government, and the American people, I cannot in good conscience vote for the $52 billion in mandatory spending while knowing that hundreds of billions in taxes and partisan spending are about to bulldoze us."

Senate Republicans had threatened to hold the semiconductor bill hostage if Democrats pushed for a climate and health care bill.

But Democrats conveniently announced the new bill only after the semiconductor legislation had cleared the Senate.

House Majority Leader Steny Hoyer condemned Republicans who voted against the chips bill out of frustration.

"My Republican friends urge a no vote, not because they think this bill is bad, but because they don't like another bill. That's what Xi and Putin are counting on," Hoyer said Thursday, referring to the presidents of China and Russia. "That's what the autocrats and authoritarians around the world are counting on — that democracy’s come to a halt. We must not rely on hostile foreign competitors to supply critical components that sustain America's manufacturing."

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