Senate China Bill to Add $52 Billion for U.S. Chip Making

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Bloomberg

May 18, 2021

The Senate will include $52 billion to bolster domestic semiconductor manufacturing in a broader bill to enhance U.S. competitiveness with China, Senate Majority Leader Chuck Schumer said.

Schumer on Tuesday called the move “a historic and immediate infusion of federal money” to restore U.S. manufacturing of semiconductors that are crucial to the automobile and electronics industries as well as the military.

Among other things, the legislation would set up a program to give financial assistance to build, expand, or modernize semiconductor fabrication plants in the U.S.

Funding to support the domestic semiconductor industry was authorized in 2021 defense policy bill, but it didn’t actually provide the money. The addition to the China bill, which is based on legislation Schumer sponsored with Indiana Republican Senator Todd Young, would remedy that.

“This is a very big deal,” Schumer said.

The addition of the funding to the broader legislation was key to moving toward passage of the measure, which Schumer wants to accomplish by the end of the month. Though additional changes may be made over the coming days, it has broad support in the chamber with bipartisan fervor to counter China’s challenge to U.S. economic primacy. President Joe Biden also has endorsed the bill.

Earlier: Chip Crisis Flummoxes Congress in a World Where U.S. Output Lags

The legislation’s path in the House is less certain. It’s unlikely the Senate version will simply be agreed upon, according to a House Democratic leadership aide. The House plans to act in the same areas as the Senate and will be considering a series of science and technology-focused education bills this week as part of that effort, the aide said. Any differences between the House and Senate would have to be negotiated before final legislation is passed and sent to Biden.

The main part of the Schumer-Young bill would authorize more than $100 billion over five years to enhance research and development of innovative technology and manufacturing at colleges, universities and other institutions and create a new entity within the National Science Foundation to focus on technology.

It also includes funding for a communications security initiative designed to counter China’s dominance of 5G networks and would require the Committee on Foreign Investment in the United States to review some foreign gifts and contracts to universities in an effort to stem China’s influence.

The legislation also would impose a “diplomatic boycott” of the 2022 Winter Olympics scheduled to take place in Beijing by prohibiting federal funds for any official delegations from the U.S. to attend.

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“This legislation will allow the United States to out-compete countries like China in critical technologies like semiconductors, create good-paying American jobs and help improve our country’s economic and national security,” Schumer said in a statement after filing the modified legislation.

The money for the semiconductor industry won’t be an immediate solution to the global chip shortage that has forced automakers to idle some production. Semiconductor manufacturing plants, known as fabs, can take as long as three years to build. But the idea is to help U.S. companies become less reliant on a handful of foreign suppliers, and avoid supply disruptions from trade disputes or outside forces, such as the coronavirus pandemic.