US President Joe Biden will sign a bill next Tuesday to subsidize the US semiconductor industry and step up efforts to make the US more competitive with China, the White House said Wednesday. The law aims to address ongoing shortages that have affected everything from cars, guns, washing machines to video games. Thousands of cars and trucks remain parked in southeast Michigan waiting for chips as shortages continue to hit automakers.
A rare major foray into US industrial policy, the bill provides for about $52 billion (roughly Rs. 4,11,400 crores) in government subsidies for US semiconductor research and manufacturing. It also includes an investment tax credit for chip factories valued at $24 billion (roughly Rs. 1,89,800 crore).
“The bill will step up our semiconductor manufacturing efforts here in America,” Biden said Tuesday.
The legislation allocates $200 billion (roughly Rs. 15,82,000 crores) over 10 years to stimulate scientific research in the US to better compete with China. Congress will still need to enact a separate appropriation law to fund these investments.
China has lobbied for a semiconductor bill. The Chinese embassy in Washington said China was “strongly opposed” to it, calling it reminiscent of “Cold War mentality”.
Many US lawmakers said they would not normally support large subsidies for private businesses, but noted that China and the European Union are allocating billions in stimulus to their chip companies. They also cited national security risks and huge global supply chain issues that are hampering global production.
Some progressive lawmakers have raised concerns about the size of government subsidies to profitable chip companies.
The Commerce Department said on Friday that it would limit government subsidies for semiconductor manufacturing and prevent firms from using the funding to “increase their profits.”
Congressional Progressive Group Chair Pramila Jayapal said the group backed the legislation after lengthy negotiations with Commerce Secretary Gina Raimondo after the group raised concerns that chip companies would use the funding to buy back shares or pay dividends.
© Thomson Reuters 2022