Legislation
Congress Passes CHIPS Act With $39B for Semiconductor Plant Construction
The Chips and Science Act would provide $52 billion to support semiconductor chip manufacturing, including $39 billion for plant construction.
U.S. House of Representatives screengrab
U.S. lawmakers voted to send a bill to President Joe Biden that would authorize, as part of $280 billion in spending, $52 billion to boost semiconductor chip manufacturing, including $39 billion toward construction of chip plants. The vote alleviated chipmakers' concerns that a delay in the funding could slow their projects.
Known as the Chips and Science Act, the legislation would also provide tax breaks for chipmakers and billions of dollars more for research.
President Biden is expected to sign the bill into law. In a statement, he said the legislation would help create jobs and lead to lower prices of goods that use semiconductors—everything from "cars to dishwashers."
“It will mean more resilient American supply chains, so we are never so reliant on foreign countries for the critical technologies that we need for American consumers and national security,” Biden said.
The U.S. House of Representatives voted 243-187 to pass the bill July 28, with just one additional day scheduled before Congress’ August recess. That followed a 64-33 Senate vote to pass the bill July 27.
Proponents of the bill have called it necessary for national security because of the wide range of equipment that requires the chips, from telecommunications to military. They have also said it would increase the U.S. economy’s competitiveness with China, as supply chain delays have caused chip shortages that have stifled manufacturing of some goods.
“This Chips and Science Bill is going to create millions of good paying jobs down the road,” Senate Majority Leader Charles Schumer (D-NY) said ahead of the votes. “It will alleviate supply chains, it will help lower costs and it will protect America's national security interests.”
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The legislation drew support from construction industry groups, including the Associated General Contractors. In a letter to senators, AGC’s vice president of government relations, James Christianson, urged them to vote “yes” on the bill, writing that fab construction would lead to further investments to build schools, commercial buildings and infrastructure.
“AGC not only supports the CHIPS Act because it provides $39 billion to fund the construction of these facilities, but also because these facilities will spur broader economic development and new, long-term construction jobs,” Christianson wrote.
U.S. Semiconductor Manufacturing Down
The Semiconductor Industry Association says the U.S. share of semiconductor manufacturing has dropped from 37% in 1990 to 12%. Chipmakers had already been moving to increase their U.S.-based production, with several plants known as “fabs” currently under construction.
These include a pair of Intel fabs worth $20 billion in Chandler, Ariz., and Texas Instruments’ $6.5-billion fab in Sherman, Texas. Manufacturers have also announced a slate of upcoming projects to build new plants. Samsung Electronics picked Taylor, Texas, as the location for its $17-billion facility last year, and recently filed paperwork indicating it could spend nearly $200 billion on 11 plants in the state.
Before the July 28 vote, some manufacturers had indicated their planned fab projects could be delayed if lawmakers failed to reach an agreement on the proposed $52 billion to support chip manufacturing. The Senate passed a similar bill last year, but that stalled in the House. House lawmakers then voted on another similar bill earlier this year, but it drew criticism over the inclusion of provisions from the PRO Act, which would have had an impact on labor negotiations.
In June, an Intel spokesperson told ENR that the start of its $20-billion manufacturing site project in Ohio could be delayed as a result of the slow negotiations in Congress, and Commerce Secretary Gina Raimondo said a $5-billion project to build a GlobalWafers fab in Sherman, Texas, could be in jeopardy if lawmakers didn’t pass the bill before the August recess.
Tom Laird, president and CEO of Gilbane, which Intel selected to lead early excavation work for its Ohio project, said in a statement that the legislation would incentivize the production of critical technology.
"We believe the bill will deliver a great impact to the construction industry in terms of spurring project development and creating jobs, while also enabling the creation of regional technology hubs and a variety of opportunities for manufacturers," Laird said.
The bill had bipartisan support, but had been criticized by some Republicans, who said it would subsidize companies that do not need assistance and potentially heighten inflation.
“This is corporate welfare,” Sen. Mike Lee (R-Utah) said July 19.
Sen. Bernie Sanders (I-Vt.) also criticized the funding, saying in a statement that profitable chipmakers created the shortage themselves by shutting down 780 plants over the past 20 years.
This article was originally published July 27 and has been updated to reflect new information.
