The enduring chip shortage exposed numerous gaps within the United States' electronic component supply chain. In response, the U.S. government has made strides towards increasing its competitive edge against other countries. On July 27th, the Senate passed a $280 billion bill to support developing a larger global presence within the semiconductor industry. This marks one of the largest government interventions in industrial policy within the last several decades.
In February this year, the House passed The America Competes Act to address the growing concern that the country was falling behind in semiconductor production. The Senate then passed its own version, the U.S. Innovation and Competition Act, which allocated $250 billion to strengthen the country’s electronic component supply chain. The bill passed this week was a compilation of the two measures.
In this edition, $52 billion in subsidies and additional tax credits will be granted to companies that manufacture their chips domestically. Additional funds would be allocated as follows:
- $200 billion for scientific research, particularly for artificial intelligence, robotics, quantum computing and other technological advances
- $10 billion dedicated to the Department of Commerce, which would be responsible for distributing chip subsidies
- Additional funding for the Department of Energy and National Science Foundation to bolster research and development of advanced semiconductor manufacturing, plus workforce programs
Alongside these monetary measures, the Senate hopes to create 20 regional technology hubs across the country. These hubs would connect research universities with private industry to form Silicon Valley-style centers dedicated to innovation.
With companies like Intel, Texas Instruments, Micron, Global Foundries and Samsung poised to benefit from the bill, there is substantial buzz within the semiconductor industry. However, it is not yet clear how the Biden administration and Congress would execute and manage this initiative. Those details are likely to be ironed out in the next few days as the bill works its way to President Biden’s desk.
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