US signs bill to boost U.S. chips, compete with China

US President Joe Biden has taken a significant step towards bolstering America’s semiconductor industry by signing a groundbreaking bill.
BE Semiconductor
On August 9, Biden signed a measure that will allocate a substantial $52.7 billion in subsidies to support semiconductor production and research within the United States. The goal is to enhance the country’s competitiveness in the field of science and technology, particularly concerning China’s growing efforts in this area.

Speaking at the signing event, President Biden expressed his confidence in America’s potential to lead in the future. He described the bill as a “once-in-a-generation investment in America itself,” emphasizing the importance of securing the nation’s position in technological innovation.

While this new legislation has been years in the making in Congress, it was met with bipartisan support. Some Republicans joined President Biden on the White House lawn to witness the historic signing. The CEOs of major chip companies such as Micron, Intel, Lockheed Martin, HP, and Advanced Micro Devices (AMD) were also present, along with governors, mayors, and lawmakers.

The impact of the bill has already begun to show, with chip companies investing heavily in the US market. For instance, Qualcomm pledged to purchase an additional $4.2 billion worth of semiconductor chips from GlobalFoundries’ New York factory, bringing its total commitment to $7.4 billion by 2028. Additionally, Micron announced a massive $40 billion investment in memory chip manufacturing, with plans to increase the US market share from 2 percent to 10 percent.

The legislation comprises a 25 percent investment tax credit specifically aimed at supporting chip plants, an incentive estimated to be worth a substantial $24 billion, Reuters news report said.

In addition to semiconductor-related provisions, the bill also authorizes $200 billion over ten years to bolster scientific research in the US. This investment is intended to enhance the country’s ability to compete with China in the scientific and technological domains. However, to put these investments into action, separate appropriations legislation still needs to be passed by Congress.

Notably, China had voiced opposition to the semiconductor bill, viewing it as emblematic of a Cold War mindset. Despite this, President Biden stressed the critical role of chips in key weapons systems, such as Javelin missiles, highlighting the importance of reducing dependency on foreign chip suppliers.

Although some US lawmakers initially expressed reservations about hefty subsidies for private businesses, they acknowledged that China and the European Union have been offering substantial incentives to their own chip companies. Furthermore, concerns over national security and supply chain vulnerabilities played a role in shaping their support for the bill.

The White House emphasized the positive effects of the semiconductor bill, stating that since 2021, the US has added 642,000 manufacturing jobs, signaling a resurgence of investment in the country. The construction of new manufacturing facilities has increased by an impressive 116 percent compared to the previous year.

Despite inventing the semiconductor, the US currently only produces approximately 10 percent of the world’s supply, with the majority coming from East Asia. The new CHIPS and Science Act aims to change this landscape and reestablish American leadership in the semiconductor industry.

The CHIPS and Science Act comprises several key provisions:

$52.7 billion for American semiconductor research, development, manufacturing, and workforce development. This includes $39 billion in manufacturing incentives, $2 billion earmarked for the legacy chips used in automobiles and defense systems, $13.2 billion for research and development, and workforce development initiatives, and $500 million for international information communications technology security and semiconductor supply chain activities.

A 25 percent investment tax credit to support capital expenses for semiconductor manufacturing and related equipment.

$1.5 billion for promoting and deploying wireless technologies that use open and interoperable radio access networks, aiming to boost US leadership in wireless technologies and their supply chains.