February 7, 2023

The House voted 243-187 on Thursday to approve a $280 billion bill to fund domestic semiconductor chip production and boost competitiveness with China.

Twenty-four Republicans joined all 218 Democrats in the vote to move the bill forward, though the House GOP leadership balked at it in frustration after Senator Joe Manchin announced a deal on a separate party lineage appeasement bill.

A Democrat, Rep. Sarah Jacobs from California, voted in attendance. Her family founded the semiconductor company Qualcomm.

The vote came a day after the Senate passed the bill in a vote of 64-33, known as CHIPS-plus, which has been in the works for more than a year.

Biden, meanwhile, interrupted a meeting with CEOS after receiving a note saying the House had enough votes to pass the CHIPS bill. “I tried for a long time,” he said with a smile. Those in the room applauded.

House Speaker Nancy Pelosi was a strong supporter of the bill – her husband Paul

The package includes $52 billion in funding for US companies to manufacture computer chips and a 25 percent tax credit for companies investing in the market. It includes $39 billion for chip manufacturers to expand and modernize their technologies and $11 billion for the Commerce Department for research and development. It includes another $81 billion for the National Science Foundation.

Biden smiles as he is passed a note saying the CHIPS-plus law passed the House during a meeting with CEOs on the economy

All of Speaker Nancy Pelosi’s Democrats voted in favor of the bill, minus one who voted in attendance

Lawmakers hope to have the bill on President Biden’s desk for signature by early August. Biden celebrated the bill Wednesday as a way to “cut costs and create jobs.”

“Because Americans are concerned about the state of the economy and the cost of living, the CHIPS bill is one answer… cutting prices on everything from cars to dishwashers.”

“It means more resilient U.S. supply chains, so we’re never so dependent on foreign countries for the critical technologies we need for U.S. consumers and national security.”

“We’ll look back at history and say this was a time when America really realized its responsibility to remain the leading economic and national security force in the world,” said Senator Majority Leader Chuck Schumer, who led the bill’s negotiations. “It’s a very, very important bill.”

The bill received support from 17 Republicans, including Sen. Minority Leader Mitch McConnell, R-Ky., and members of his leadership team, including GOP Policy Committee Chair Sen. Roy Blunt, R-Mo., and Sens. John Cornyn, R-Texas and Rob Portman, R-Ohio.

Biden warned on Tuesday that China was “advanced” the US on chip manufacturing, saying the US relies on Taiwan for imports while China is encroaching on democracy on the island. He said the CHIPS law was a “national security obligation” as he claimed a third of “core” inflation was due to the high cost of vehicles, which require such chips to manufacture.

Opponents have criticized the industry tax breaks as an excessive subsidy to large tech companies.

Vermont Sen. Bernie Sanders voted against the bill. Sens. Joe Manchin, DW.Va., and Lisa Murkowski, R-Alaska, did not vote after announcing they tested positive for covid and Sen. Pat Leahy, D-Vt., did not vote as he is recovering from surgery.

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Pandemic problems in the supply chain have underlined how reliant the US is on foreign imports for the chips used in cars, computers, appliances and weapon systems.

Each Javelin missile launcher contains hundreds of semiconductors, leading defense officials to worry that a shortage could affect the country’s weapons capability.

Continued reliance on foreign conductors would be “absolutely dangerous, and a disruption to our chip supply would be catastrophic,” national security adviser Jake Sullivan said during a meeting with Biden on Monday.

America invented the semiconductor. It’s time to take it home,” Biden said.

Commerce Minister Gina Raimondo told him that chip makers are finalizing investment plans and that the money provided through the account will play an important role in their decision.

‘We know that they are going to expand, because that is necessary to meet the demand. There is no doubt about that,” Raimondo told Biden. “The question is, where are they going to expand? And we want them, we need them to expand here in the United States.”

The leaders of Medtronic, a medical device manufacturer, as well as Cummins Inc. and defense contractor Lockheed Martin, the president also argued about the need for the bill.

‘Like others at the table, we are dealing with a supply chain crisis. We are unable to get the components we need and semiconductors are always at the top of the list,” said Tom Linebarger, chairman and CEO of Cummins Inc., which makes diesel engines.

Linebarger said the company now pays brokers as much as 10 times its normal cost to get the computer chips it needs. The federal government’s investment through the bill would lead manufacturers to stop wringing our hands about where we compete with others, but actually go out into the field and help U.S. manufacturers compete,” he said.

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All in all, the bill would increase U.S. deficits by about $79 billion over the next 10 years, according to the Congressional Budget Office. The bill also authorizes about $200 billion to advance high-tech research in the US over the next decade. Congress must approve that funding as part of future spending bills, and the CBO has not included that research money in its deficit projection.

Critics have compared spending to “social welfare” and said the money could be better spent on other priorities or not at all. sen. Bernie Sanders, I-Vt., said he’s not hearing from people about the need to help the semiconductor industry. Voters talk to him about climate change, gun safety, preserving a woman’s right to abortion and increasing Social Security benefits, to name a few.

“Not too many people I can remember – I’ve been all over the country – say, ‘Bernie, you go back there and you get the job done, and you give hugely profitable companies, paying outrageous compensation packages to their CEOs, billions and billions of dollars in corporate welfare,” Sanders said.