US Senate Passes $52 Billion Subsidy for Domestic Semiconductor Producers, Sends Bill Back to House

© AP Photo / J. Scott ApplewhiteUS Senate
US Senate - Sputnik International, 1920, 27.07.2022
When billions of people started working from home at the start of the COVID-19 pandemic, it produced a surge in demand for electronics that has outstripped the supply of semiconductors for computer chips, and countries have struggled to cope with the resulting shortage. The production bottleneck has helped drive up prices.
The CHIPS-plus, or Chips and Science Act, made it through the Senate on Wednesday in a 64-33 vote, and will now go back to the House for reconciliation. The lower chamber initially passed the bill in February, but the Senate has made a large number of additions.
The bill would provide $52 billion in subsidies for US companies that produce computer chips, as well as tax credits for companies that expand chip manufacturing and funding for developing related technologies.
Speaking after the Senate vote, House Speaker Nancy Pelosi (D-CA) hailed the CHIPS Act as “a major victory for American families and the American economy.” That means her family especially: her husband, investor Paul Pelosi, bought between $1 million and $5 million shares in chipmaker Nvidia last month, sparking accusations that the senior lawmaker had given him insider information. She has denied the accusations.
Paul Pelosi and Nancy Pelosi attend the 2019 Time 100 Gala, celebrating the 100 most influential people in the world, at Frederick P. Rose Hall, Jazz at Lincoln Center on Tuesday, April 23, 2019, in New York - Sputnik International, 1920, 17.07.2022
Pelosi's Husband Buys Up to $5 Million in Computer Chip Stocks Ahead of Hefty Gov’t Subsidy Vote
Another critic of the bill has been US Sen. Bernie Sanders (I-VT), who railed against a ”$53 billion blank check to profitable microchip and semiconductor companies.”
“Let us build back the US microchip industry,” Sanders said in the Senate chamber prior to the vote, “but let us do it in a way that benefits all of our society, not just a handful of wealthy profitable corporations.”
The US is already the world’s largest chipmaker, but demand has far outstripped supply, thanks to the COVID-19 pandemic and the remote working and recreation it has forced upon billions of people. In addition, Washington is worried that its suppliers of semiconductors, including Taiwan and South Korea, could be vulnerable to Chinese interference as the US ramps up its “great power competition” with Beijing and Moscow.
“The bottom line is that continuing our dependence on a limited number of overseas facilities to produce so many of the chips we consume, including all of our most-advanced chips as of right now, is flat-out dangerous,” White House national security adviser Jake Sullivan told reporters at the White House on Tuesday. “And a disruption to our chip supply would be catastrophic.”
“The longer we wait, the more dangerous the disruption,” he added.
Parallel to the drive to expand domestic chip production, the US has been pushing a Chip 4 alliance with South Korea, Japan, and the autonomous Chinese island of Taiwan. While Tokyo and Taipei have openly embraced the plan, Seoul has vacillated, being closely tied to China, which buys 60% of its semiconductors every year.
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