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House Passes CHIPS Act to Fund Semiconductor Production, Sending Measure to Biden’s Desk

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The legislation is a big deal, and must be the first step in a bigger effort to strengthen our domestic manufacturing capabilities.

The House on Thursday voted 243-187-1 to pass the CHIPS and Science Act, legislation that will allocate $52 billion in funding to spur domestic production of semiconductors and provide another $200 billion in research and development for a variety of projects.

The CHIPS bill took years to come to fruition — and had a whole lot of names along the way — but once its passage came together, it came together quickly. The Senate approved it in a strong 64-33 bipartisan vote on Wednesday, and President Biden already has said he’ll sign the bill.

Here’s what Biden had to say:

“As Americans are worried about the state of the economy and the cost of living, the CHIPS bill is one answer: 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. It 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. … For decades, some ‘experts’ said we needed to give up on manufacturing in America. I never believed that. Manufacturing jobs are back. Thanks to this bill, we are going to have even more of them.”

The Biden administration long maintained CHIPS funding was needed to encourage semiconductor production in the United States. Commerce Secretary Gina Raimondo warned that the bill’s passage was necessary to safeguard our national and economic security, and she expressed concerns that semiconductor producers would build factories elsewhere if the legislation didn’t get approved.

Congress apparently got the message, and the CHIPS bill may very well end up marking a shift in how Washington does business. My colleague Matt McMullan summed up the historic significance of this measure nicely:

“For decades, Washington encouraged manufacturing for all kinds of industries to offshore, and that meant the human capital and technological know-how for lots of advanced manufacturing techniques offshored too. And all it took was a couple of years of deteriorating relations with the Chinese government, a pandemic that continues to strain global supply chains, and a disruptive land war in Europe to help convince enough American lawmakers that it’s time to entice critical manufacturing sectors to return to the United States.”

Lo and behold, it does appear that putting even a small bit of industrial policy in place can entice industrial production. Several companies already have announced plans to build semiconductor plants in the United States, and many have cited the CHIPS legislation as a motivating factor.

Intel announced new facilities in Ohio and Arizona; Samsung is set to build a $17 billion plant in Texas; and Texas Instruments plans to build four factories in the Lone Star State. South Korea’s SK Group announced on Tuesday it will invest $22 billion in U.S. operations, which will include semiconductor production. And that’s just a handful of the announcements that already have been made.

There’s a catch to all this, of course. The bill passed by the Senate left out important trade enforcement provisions designed to ensure America’s workers and manufacturers can compete in the global market and take on the predatory trade practices of China and other countries. Here’s Matt again:

“There’s no update to the de minimis rule that allows importers like Amazon to avoid billions of dollars in duties and other customs fees. There’s no establishment of an outbound investment review process that would examine the sale and offshoring of production capacity in critical sectors to foreign adversaries. There’s no update to antidumping and countervailing duty laws to keep up with evolving unfair trade tactics used by importers in sectors like steel and aluminum. And there’s no reauthorization of Trade Adjustment Assistance for workers who have lost their jobs to trade disruptions. Congress shamefully let the 50 year old program lapse a few weeks ago.”

All of this is why when Alliance for American Manufacturing President Scott Paul commented on the bill’s passage on Wednesday, he made sure to point out that it should be treated as “the first step, not the last word.” If Congress doesn’t act to put strong trade enforcement measures in place, the United States still may still end up losing the 21st century to adversaries like China.

And we can’t stop investing in our own industries, either. After all, semiconductors aren’t the only strategically important industry deserving of attention from Congress. Here’s one example: The United States now makes just 4% of the world’s supply of printed circuit boards, which are needed to power semiconductors.

The passage of the CHIPS and Science Act is indeed worth celebrating. The United States invented semiconductors, and the investments made by Congress this week will help ensure the United States will make a whole lot more semiconductors, too. But there’s plenty of work left to do.

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