Dems, GOP meet to approve CHIPS account; Biden will sign it next week

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After being passed by the Senate on Wednesday, the House on Thursday introduced the bill that will help build a stronger semiconductor industry in the US. With 243 votes to 187, the “Chips and Science” bill passed with bipartisan support. 218 Democrats voted for the bill that joined 24 Republicans with one Democrat marked as in attendance.

According to Reuters, the bill results in $52 billion in government grants to help manufacture semiconductors in the US that can be used in automobiles, video games, high-tech weapons, and electronic devices (which is a broad category that includes smartphones and tablets). The bill also includes $24 billion in investment tax credit for the construction of semiconductor manufacturing plants.

The “Chips and Science Bill” had bipartisan support and is now going to the White House to be signed by the president

The bill also authorizes disbursements of $170 billion over five years to fund scientific research to help the US better compete with China. Both countries want to become self-sufficient in the semiconductor industry. While both the US and China are home to chip design companies, neither are capable of making advanced chips. China’s largest foundry, SMIC, has recently started producing basic 7nm chips for cryptocurrency miners and while that has made some people nervous, SMIC currently poses no threat to world leaders TSMC and Samsung.

Congress would have to pass separate credit laws to fund investment for scientific research. Democratic Senate leader Chuck Schumer said, “This legislation will create high-paying jobs, ease supply chains, help lower costs and protect America’s national security interests.”

TSMC is building a plant in Arizona that is expected to supply chips made using its 5nm process node by 2024. The problem here is that by 2024 the very latest chip production will be at 3nm with 2nm around the corner in 2026. This process node number continues to shrink and the smaller the number, the higher the number of transistors found in chips. This is important because the greater the number of transistors, the more powerful and energy-efficient a chip is. However, the good news is that many of the chips used in cars use more mature technology, with some of these chips being made with older process nodes used on PCs back in 2005!

Senator Mark Warner, the senior U.S. Senator from Virginia, said, “Had we not done this, no other American semiconductor manufacturing plant would have been built in this country.” The senior senator from Texas, Republican John Cornyn, noted: ‚ÄúThis is a bad day for President Xi and the Chinese Communist Party. The slumbering giant that is America has finally awakened to the challenge we face from the People’s Republic of China .”

Without the bill, US GDP would have fallen by 10% and the auto industry would have collapsed

The Chinese embassy in Washington said it was “firmly against the bill”. China called it “anchored in the Cold War and zero-sum game mentality and goes against the common aspiration of people from all sectors in China and the US to strengthen exchanges and cooperation.”

The bill is vital to the future of American technology. Senator Mark Kelly (D-AZ) said that if the US lost access to chips produced in Taiwan, US auto production would cripple and gross domestic product (GDP) could fall by 10%. The latter is a measure of the value of the goods and services produced in the states minus the value of the goods and services used in production.

Before the House voted, President Joe Biden said: “As Americans are concerned about the state of the economy and the cost of living, the CHIPS bill is one answer: It will accelerate semiconductor production in America, driving up prices for everything from cars, sinks. to dishwashers.” One critic of the bill was independent Senator Bernie Sanders, who described it as a “blank check” to be cashed by highly profitable chip makers.

The bill now goes to the White House, where President Biden is expected to sign it.

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