Biden signs multibillion CHIPS Act to compete with China
The Bill could give the USA a leg up on global chip manufacturing
President Biden has signed a new Act into law that includes nearly $53 billion in subsidies to support domestic semiconductor and other high-tech industries, which US policymakers worry risk being dominated by China.
Biden termed the CHIPS and Science Act a "once-in-a-generation investment in America itself" that would help the nation compete on the global stage.
"We need to make these chips here in America to bring down everyday costs and create jobs," he said at a signing ceremony.
Vice President Kamala Harris and Speaker of the House Nancy Pelosi were also present at the signing ceremony, in addition to several Republican lawmakers and top executives from major US companies including Intel, HP, AMD and Lockheed Martin.
It has taken nearly two years of discussions and political infighting to get to this point, with both House and Senate finally approving the Act late last month.
Despite the fact that the semiconductor was invented in the USA, only 10% of the world's supply is produced there, with 75% of US supplies coming from East Asia.
The CHIPS and Science Act aims to invest in the domestic semiconductor industry, which could eventually help in alleviating the chip supply issues.
The $52.7 billion investment includes $39 billion in manufacturing incentives, $13.2 billion for research and development activities, $2 billion for legacy chips used in defence systems and the automotive sector, and $500 million for semiconductor supply and global ICT security.
In addition, it offers a 25% investment tax credit on costs associated with equipment for semiconductor manufacture.
The funding authorisation brings Intel and other chipmakers one step closer to building out plants in states like Arizona and Ohio, and will help them complete existing projects that depend on the subsidies.
According to The White House, Qualcomm has committed to spending a total of $4.2 billion on chips from GlobalFoundries' New York manufacturing unit, raising its total commitment to $7.4 billion in purchases through 2028.
Additionally, Micron is announcing a $40 billion investment in the production of memory chips, increasing its US market share from 2% to 10%.
The CHIPS and Science Act grants $200 billion over 10 years to boost American scientific research, to help the country compete with China's manufacturing industry.
The Chinese Embassy in Washington described the bill as a reminiscent of a 'Cold War mentality,' adding that China was 'firmly opposed' to it.
Biden pointed out that the USA needs chips for weapon systems like the Javelin missile system, so "It's no wonder the Chinese Communist Party actively lobbied U.S. business against this bill."
Many American lawmakers had said that they typically would not approve substantial subsidies for private firms, but pointed out that China and the EU had been giving their chip firms billions in incentives.
Gina Raimondo, Secretary of Commerce, warned last month that the US could miss out on the semiconductor industry's rush to build additional chips.
"Semiconductor companies need to get 'concrete in the ground' by this fall to meet this increased demand in the years ahead," Raimondo said in a letter with Secretary of Defense Lloyd Austin.
"CEOs of firms all along the supply chain have made clear that the industry is deciding where to invest now."