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Senate advances Chips Act to subsidize semiconductor chip production

The Senate voted Tuesday to advance a bill that would provide subsidies for the production of semiconductor chips, technology the Biden administration says is critical to the United States’ economy and national security. The vote to proceed with the bill was 64-32. 

The CHIPS for America Act, short for the Creating Helpful Incentives to Produce Semiconductors for America Act, would designate $52 billion in subsidies and offer an investment tax credit to encourage semiconductor companies to boost manufacturing in the U.S. President Biden held a virtual meeting Monday with CEOs and labor leaders to discuss the bill, to send the message that the U.S. relies too heavily on China for chips that power electronics, medical supplies and defense equipment. The president wants to sign the bill as soon as possible. 

Mr. Biden has also made the case that increasing semiconductor production “here at home” will help fight inflation. 

“One-third of the core inflation last year in 2021 — one-third of it — was due to the high price of automobiles. You know why that’s driven? That’s driven by an inability to manufacture more automobiles. Why? The shortage of semiconductors.” 

Commerce Secretary Gina Raimondo pointed out during an interview with CBS News’ “Face the Nation” Sunday that currently, the U.S. doesn’t make any of the “leading edge” semiconductors, the sophisticated chips needed for military equipment and high-end computing. “We buy almost all of them from Taiwan … 90% we purchase from Taiwan,” she told moderator Margaret Brennan. The U.S., she argued, needs American companies to expand their production. Other European countries also provide incentives, Raimondo noted.

The bill still would need to pass the House before it could go to the president for his signature. Democrats hope to pass the legislation before August recess. The House passed a similar bill to support semiconductor chip production earlier this year, but Democrats have since negotiated further to reach an agreement that could pass both chambers. 

Raimondo is confident the bill will pass. “This will be a big bipartisan vote in the House and the Senate,” she predicted. 

She also pushed back against criticism from both the left and the right. Senator Bernie Sanders has called the bill a blank check for the the microchip industry. Raimondo said the bill clearly has bipartisan support.

“I fully dispute Senator Sanders’ characterization of this. It isn’t a blank check,” Raimondo said on Sunday. “There are many strings attached. Strings attached — companies can’t use this money to build facilities in other countries. Companies who accept this money can’t then turn around and be building facilities in China for leading edge technology. There’s a lot of strings attached around the quality of jobs that have to be created, working with small contractors and minority-owned contractors. There are labor protections. So to say it’s a blank check is just dead wrong.” 

— Jack Turman contributed to this report.

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