House Passes Chips Act to Boost U.S. Semiconductor Production

The Chips and Science Act of 2022 will spend $52.7 billion on direct financial assistance for the construction and expansion of semiconductor manufacturing facilities, as well as other programs. It adds $24 billion in tax incentives and other provisions.

The bill was backed by almost all Democrats and 17 Republicans when the Senate passed it Wednesday, and several House Republicans had been expected to back the package as well, seen as critical to assuring passage. But the level of their support was thrown into doubt when Senate Majority Leader

Chuck Schumer

(D, N.Y.) announced a surprise deal with Sen. Joe Manchin (D., W.Va.) on a Democratic climate, healthcare and tax bill that Republicans oppose.

Following the announcement of the deal, some House Republican leaders told their conference to vote against the chips legislation. House Minority Leader Kevin McCarthy (R., Calif.) urged colleagues to reject what he called a “deeply flawed bill” while also pointing to the Manchin deal as bad policy, saying it would fuel inflation.

“The bill unlocks the Democrats’ radical tax and spending spree,” said Rep. Cathy McMorris Rodgers (R., Wash.).

Rep. Michael McCaul (R., Texas) voted for the bill despite the surprise Democratic deal in the Senate. Republicans who backed the package said domestic chip production was critical for the nation’s defenses.

“What Schumer did was a grave disservice and the timing of it, you know, making this a political issue…it should be a national security issue,” he said.

Democrats said Republicans should focus on the chips legislation on its own merits, not the Manchin deal.

“Very frankly, if we made a judgment on every piece of legislation that we consider that ‘I don’t like some other bill,’ we’d be in real trouble,” House Majority Leader

Steny Hoyer

(D., Md.) said.

President Biden was at a roundtable in the White House with business executives when he received a note during the vote saying the bill had received enough votes to clear the House.

Ahead of the vote, Mr. Biden had urged the House to approve the package, which the administration has said is crucial to national security and competing with China. “My plea is: Put politics aside. Get it done,” he had said.

The spending package addresses the concern by lawmakers of both parties that the U.S. needs to attract more manufacturing of chips and technology as a response to Beijing’s technological and economic rise.

The bill “helps fulfill the Biden administration’s goal of revitalizing our domestic manufacturing economy,” said Commerce Secretary

Gina Raimondo,

who has lobbied lawmakers to support the package.

Democrats have touted this bill as a legislative victory ahead of the midterm elections in which Republicans are favored to win the House. Proponents said it would help the supply-chain woes that have dogged Americans trying to buy cars and appliances that rely on chips, though it could be years before the true benefits of the bill are seen.

Some companies celebrated the passage of the bill.

Steven Croley,

chief policy officer and general counsel at

Ford Motor Co.

, cited recent investments in electric vehicles and batteries and said the bill “will help make those manufacturing lines hum.”

The bill allocates $39 billion for semiconductor manufacturing, but also includes $11 billion to advance semiconductor manufacturing research and workforce training, and a $2 billion fund to more quickly translate laboratory advances into military and other applications.

Several chip fabricators like

Intel Corp.

,

Taiwan Semiconductor Manufacturing Co.

and

GlobalFoundries Inc.

have already announced plans to build plants in the U.S. contingent on the bill’s passing.

Many lawmakers also see hometown benefits in the bill’s second component, which authorizes nearly $170 billion for technology research and development across several federal agencies during the next five years.

Chunks of that funding are expected to flow to rural states under new formulas for distributing research dollars. The legislation also directs the Commerce Department to create 20 “regional technology hubs” designed to create more tech jobs across the country.

The technology R&D investments target fields including artificial intelligence, quantum computing, wireless communications and precision agriculture.

The National Science Foundation would oversee a new $20 billion directorate focused on accelerating the development of technologies critical to U.S. security, in addition to an increase to $61 billion for its core activities funding researchers at universities and elsewhere.

The Energy Department’s Office of Science’s five-year authorization would increase to about $50 billion to boost a series of programs focused on clean energy, nuclear physics and high-intensity lasers.

The bill also sets new long-term policies for the National Aeronautics and Space Administration, instructing the space agency to give priority to the research required to bring Americans to Mars, as well as programs such as Artemis, which could put the first woman and person of color on the moon.

Write to Natalie Andrews at [email protected]