The U.S. Senate voted 64-32 on Tuesday to advance legislation to dramatically boost U.S. semi-conductor manufacturing in a bid to make the domestic industry more competitive with China.
The legislation provides about US$52-billion in government subsidies for U.S. semi-conductor production as well as an investment tax credit for chip plants estimated to be worth US$24-billion.
The Senate is expected to vote on final passage in coming days and the U.S. House could follow suit as soon as later this week.
U.S. President Joe Biden and others have cast the issue in national security terms, saying it is essential to ensure U.S. production of chips that are crucial to a wide range of consumer goods and military equipment.
Commerce Secretary Gina Raimondo called the vote “a symbol of the strong bipartisan coalition working to build more chips in America. These chips keep our economy strong and our country safe.”
The bill aims to ease a persistent shortage that has dented production in industries including automobiles, consumer electronics, medical equipment and high-tech weapons, forcing some manufacturers to scale back production. Auto production has been especially hit hard.
“The pandemic made clear with unforgiving clarity how America’s chip shortage was creating a crisis,” the Senate’s Democratic Majority Leader, Chuck Schumer, said before the vote.
The Semiconductor Industry Association said the vote is a “vital step toward enactment of legislation that will strengthen American chip production and innovation, economic growth and job creation, and national security.”
Mr. Biden pushed hard for the bill, which has been in the works for well over a year, with a version passing the Senate in June, 2021, but stalling in the House. This frustrated lawmakers from both parties who view competition with China and global supply chain issues as top priorities.
Critics such as Senator Bernie Sanders have called the measure a “blank cheque” to highly profitable chips companies.
Mr. Biden met virtually on Monday with the chief executives of Lockheed Martin Corp., Medtronic PLC and Cummins Inc. along with labour leaders as part of the administration’s push for the legislation.
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