TECH

US passes bill to boost domestic chip production amid shortages

On Friday, Democrats swept the House through tough legislation that they say positions the United States to better compete with China economically and on the world stage by bolstering the domestic semiconductor industry and bolstering supply chains. strained supply.

The bill passed by a vote of 222-210. It marks a milestone for a top priority of the Biden administration, but the legislation is likely to undergo a major overhaul as negotiators reconcile differences with what the Senate passed about eight months ago. President Joe Biden urged lawmakers to reach a deal quickly, saying, “America can’t afford to wait.”

The nearly 3,000-page bill, not including dozens of amendments added this week, includes massive investments intended to boost semiconductor manufacturing in the United States. help the semiconductor industry and $45 billion (about Rs. 3,35,900 crore) to strengthen supply chains for high-tech products.

But Democrats have also incorporated other priorities that have raised concerns within the GOP about the cost and scope of the bill. Rep. Adam Kinzinger of Illinois was the only Republican to vote for the measure, while Rep. Stephanie Murphy of Florida was the only Democrat to vote against.

The bill includes $8 billion (about Rs. 59,700 crore) for a fund that helps developing countries adapt to climate change; $3 billion (about Rs 22,400 crore) for facilities to make the United States less dependent on Chinese solar components; $4 billion (about Rs. 29,900 crore) to help communities with unemployment rates significantly higher than the national average; and $10.5 billion (about Rs. 78,400 crore) for states to stockpile medicines and medical equipment.

Democrats were in celebratory mood ahead of the vote after the latest jobs report showed employers added 467,000 jobs in January. They said the legislation would lead to more good news on that front.

“The bill we’re talking about today is a jobs bill, a jobs bill to make it in America, to make it in America,” Pelosi said.

The bill gives Democrats a chance to address voter concerns about the economy at a time when a shortage of computer chips has driven up prices for automobiles, electronics and medical devices. To show his administration is solving inflation problems, Biden highlighted the vote at a White House event on Friday and reminded Americans of Intel’s announcement two weeks ago that it would build two factories of production of computer chips in Ohio.

Republicans, who for months have hammered Democrats over rising inflation, called the measure ‘toothless’ and falls short of what is needed to hold China accountable for a range of economic actions. and defense of human rights. They also said it would waste taxpayers’ money on environmental initiatives and other unnecessary programs.

“This bill is really just a long list of dreamy progressive policies that have nothing to do with China,” Rep. Michelle Fischbach, R-Minn, said.

Commerce Secretary Gina Raimondo met with House Democratic lawmakers this week to discuss the bill. She said the “most urgent need” in the bill was the $52 billion for domestic chip production due to the effect of the global chip shortage on the economy, including the auto sector. , and the national security implications of manufacturing so many semiconductors overseas.

“We can’t wait any longer,” she told reporters on Friday. “We are so behind. We are in such a dangerous place for national security reasons simply because of our reliance on Taiwan for our most advanced chips.

Major chipmakers like Intel and Samsung recently announced plans to build new factories in the United States, but Raimondo noted they also said they could get “bigger and faster” with help. of the federal government.

One of the biggest hot spots is the $8 billion (about Rs 59,700 crore) of legislation to help developing countries reduce emissions and tackle climate change. Former President Barack Obama pledged $3 billion (about Rs 22,400 crore) to the fund, but former President Donald Trump withheld $2 billion (about Rs 14,900 crore).

Rep. Michael McCaul, the top Republican on the House Foreign Affairs Committee, called it an “irresponsible UN slush fund” that has already provided at least $100 million (about 750 crore rupees) to China.

Meanwhile, America’s share of the world’s semiconductor manufacturing has steadily eroded, from 37% in 1990 to around 12% today. The Biden administration and lawmakers are trying to reverse that trend, which industry officials say is driven by foreign competitors receiving large government subsidies.

The pandemic has put a strain on the chip supply chain. The Commerce Department released a report last week that found median inventory for certain semiconductor products fell from 40 days in 2019 to less than five days in 2021. The report also says stakeholders are not seeing not the problem will go away in the next six months. . The administration cited the findings as calling on Congress to act.

Tensions with China are reflected in much of the legislation. In a nod to concerns about the origins of COVID-19, the bill directs the president to submit a report to Congress on the most likely origin of the virus, the level of confidence in that assessment, and the challenges of making such an assessment.

Republicans dismissed the provision as “no independent investigation, no penalties, no punishment.” They want a select committee of lawmakers to look into the origins of COVID-19. “Instead of taking action to get real accountability, he’s going to ask them for a report,” Republican Leader Kevin McCarthy of California said.

Another provision would subject more lower-cost products made in China to tariffs. Currently, imports worth less than $800 (about Rs 59,700) are exempt from expedited processing and tariffs. The bill eliminates the threshold for certain countries, including China.

The Senate passed its computer chip legislation in June by a vote of 68 to 32, representing a rare episode of bipartisanship on major legislation. Negotiators will now try to find a compromise that both chambers can agree to, although it is not certain they can do so before the midterm elections.

Anything that emerges will need the support of 10 50-50 Senate Republicans to pass.

“We will send House Republicans a much better option to vote in the next two months,” said Sen. Todd Young, R-Ind., who worked with Senate Majority Leader Chuck Schumer on the version of the Senate Legislation.

“Senate and House Democrats know we still have a lot of work to do to tie together our two proposals and move this bill to the president’s desk, and I think we will,” Schumer said.


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