WASHINGTON, July 19 (Reuters) – The U.S. Senate voted on Tuesday to proceed with a watered-down version of legislation to provide billions of dollars in subsidies and tax credits to the semiconductor industry, hoping to ease shortages that have disrupted production in industries from cars to electronics and high-tech weapons.
The Senate backed a procedural measure 64-34, setting up potential votes to pass the legislation in the Senate and House by the end of next week.
The bill is part of a broad government-wide effort to counter a rising China and ease supply chain problems, in this case by reducing American companies’ reliance on foreign-made semiconductors.
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The final text was not released before the procedural vote, but Senate aides said the measure includes about $54 billion in subsidies for U.S. semiconductor companies, as well as a new, four-year, 25 percent tax credit to encourage companies to build plants in the United States. The tax credit is estimated to be about $24 billion.
Officials from President Joe Biden’s administration urged Congress to pass a semiconductor bill before they leave Washington for their annual vacation in August, saying it would not only create and preserve U.S. jobs but also strengthen national security.
INDUSTRY WANTS FUNDING
Semiconductor companies are also pushing for action.
Intel Corp ( INTC.O ) said in January it would spend $20 billion on a factory in Ohio after breaking ground on two new plants in Arizona last year. That could grow to $100 billion with a total of eight manufacturing plants and would be the largest investment in Ohio on record, Intel Chief Executive Pat Gelsinger said in January.
However, he added that without government funding, “it’s just not going to happen as fast and it’s not going to grow as fast.”
Sen. Maria Cantwell, the Democrat who chairs the Senate Commerce Committee, urged lawmakers to vote yes.
“Today’s vote is really about whether we will stop shipping jobs overseas and invest in American R&D instead. If we invest in American R&D, then we’ll see the plant that’s being talked about in Ohio get built instead of Europe being built right away,” she said.
Many large weapons systems also require complex computer chips. For example, the Javelin missile systems made by Raytheon Technologies ( RTX.N ) and Lockheed Martin Corp each contain 250 microprocessors. These systems are in high demand by Ukrainian soldiers as they work to repel Russia’s invasion of Ukraine, an operation Moscow calls a “special operation.”
The current bill is a watered-down version of rival measures in the Senate and House that stalled before becoming law, although efforts to counter China are policies generally supported by both Republicans and Democrats, who Biden narrowly controls Congress.
The Senate approved a bipartisan $250 billion bill to increase spending on technology research and development in June 2021, one of the first major pieces of legislation passed since Democrats regained their slim control of the chamber.
However, the legislation never passed in the House, which earlier this year passed its own bill with little to no Republican support. That measure includes provisions to boost chipmakers, but also billions of dollars for other supply chains and the Global Climate Change Initiative, which Republicans oppose. Read more
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Reporting by Patricia Zengerle; Editing by Leslie Adler, Josie Cao and Kenneth Maxwell
Our standards: The Thomson Reuters Trust Principles.
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