US lawmakers advance bill to boost chip making

The US Capitol building in Washington, DC. (Getty Images)

The US Senate on 27 July passed a Pentagon-backed bill that would provide USD76 billion to shore up domestic production of semiconductor chips.

The Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, which the Senate approved by a 64–33 vote, heads to the House of Representatives, which is expected to pass the bill on 28 July. President Joe Biden has indicated he will sign the legislation into law when it reaches his desk.

Proponents say the bill, which has been in the works for years, is needed to reduce US reliance on foreign, potentially unreliable sources of chips used in military weapon systems, automobiles, consumer electronics, and household appliances. The US share of global semiconductor manufacturing capacity plunged from 37% in 1990 to about 12% in 2020 and is forecast to fall to 10% in 2030, according to the Washington, DC-based Semiconductor Industry Association (SIA).

“Our failure to produce semiconductors at home is a threat to both our economy and national security, which is why this bipartisan bill is needed more than ever,” said Senator Jeanne Shaheen, a New Hampshire Democrat and a senior member of the US Senate Committee on Armed Services.

At a virtual meeting that Biden held with government officials, industry representatives, and others on 25 July to promote the CHIPS Act, US Deputy Secretary of Defense Kathleen Hicks and Lockheed Martin chairman, president, and CEO Jim Taiclet both urged passage of the legislation. The US Aerospace Industries Association (AIA) has also endorsed the bill, which includes USD52 billion to fund research, development, manufacturing, and training, and USD24 billion in tax credits.