Flea Bill Advances in the Senate – Here’s What’s in the $79 Billion Legislation

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After more than a year of negotiations, Congress is set to pass a bill aimed at easing the chip shortage and boosting US competitiveness with China, in part by granting $50 billion. to the semiconductor industry.

The Senate voted 64 to 32 on Tuesday to end debate on the so-called “CHIPS+” invoice. This key step, which required 60 votes, now prepares the ground for the final passage in the coming days.

As the key procedural step began, Senate Majority Leader Chuck Schumer (D-NY) said the effort would contribute to “one of the most important struggles of this century.”

“The 21st century will be won or lost on the battlefield of technological innovation,” he added.

The invoice cost is still being calculated. A preliminary Congressional Budget Office analysis estimates that the bill will result in about $79 billion in new spending over the next decade. The bill will also redirect existing government money to the effort; a more complete accounting should be published soon.

Legislators had already adopted a more ambitious version of the bill, and for a time lawmakers discussed a “light” version that would only include direct incentives to the semiconductor industry. But in the end, lawmakers added a host of provisions into the bill, blow up the cost.

Here are the highlights of the bill, which Sen. Mark Kelly (D-AZ) recently told Yahoo Finance “affects the costs of so many things for Americans,” from your cellphone to your vacuum cleaner to systems. government weapons.

President Joe Biden spoke Monday with CEOs, labor leaders and members of his economics team during a virtual meeting on semiconductors. (Anna Moneymaker/Getty Images)

“America invented the semiconductor”

Tuesday’s vote came after a full court press from the Biden administration to revive the effort after months of fruitless negotiations.

“America invented the semiconductor – it’s time to bring it home,” President Joe Biden said Monday during a virtual White House event.

Meanwhile, Commerce Secretary Gina Raimondo criticized the bill, pointing out that it is not about making businesses more profitable, but rather about investing in the US economy.

From the private sector, a host of companies descended on Washington this week to push the bill over the finish line. Gary Cohn, the former director of the National Economic Council and current vice president of IBM (IBM), said his company alone brings together more than 60 executives to meet lawmakers.

The key provision in the bill are the $50 billion for chip makers. Of these funds, $39 billion is intended to “build, expand or modernize national facilities” for manufacturing chips.

The rest – $11 billion – is earmarked for research and development. This money seems destined to alleviate a fracture that had developed between semiconductor companies like Advanced Micro Devices (AMD), Qualcomm (QCOM) and Nvidia (NVDA), which had focused on designing – but not manufacturing – these crucial chips and feared being left behind next to.

Either way, Intel (INTC) will be a key recipient of the funds. The company recently postponed the grand opening of an Ohio plant due to delays with the bill, but promised to move forward if it becomes law.

Other companies that appear likely to receive funds include Texas Instruments (TXN), Micron Technology (MU), Global Foundries (GFS) and Samsung.

A new investment tax credit

Elsewhere in the bill, an additional $4.2 billion will help fund other areas of the industry such as workforce training, defense initiatives, future innovation and the U.S. market. mobile broadband. The broadband money is focused on “advanced technologies,” including an effort to promote the manufacture of non-Chinese 5G gear.

Another part is a new “Advanced Manufacturing Investment Credit,” which creates a new 25% tax benefit for semiconductor manufacturing. It’s part of a series of efforts that proponents say will help the United States catch up in the global race to manufacture semiconductors.

The United States’ role in semiconductor manufacturing has fallen from nearly 40% in 1990 to 12% today, according to a recent report from the Semiconductor Industry Association. The situation is even worse with the world’s most advanced logic semiconductors, 100% of which were manufactured overseas in 2019. The group applauded progress of the bill.

US President Joe Biden delivers a semiconductor chip as he speaks before signing an executive order, aimed at addressing a global shortage of semiconductor chips, in the State Dining Room of the White House in Washington, U.S. February 24, 2021. REUTERS/Jonathan Ernst TPX IMAGES OF THE DAY

President Joe Biden holds a semiconductor chip during a 2021 event at the White House. (REUTERS/Jonathan Ernst)

Daniel Clifton, Washington head of research at Strategas, recently told Yahoo Finance that many see semiconductors as “the new oil.” If a nation can “control oil and chips, you start controlling the production of pretty much everything that’s going to happen in the economy and we might see that’s where the long term trend is. “, did he declare.

Other “guardrails” targeting China

The invoice is also configured to restrict the activities of semiconductor companies, prohibiting new work “in specific countries that pose a threat to the national security of the United States”. The language is clearly aimed at China, which has also taken steps to strengthen its semiconductor industry.

The provision is designed to ensure that China receives no benefit from new US government funds. “We’re not going to have to worry so much about the actions of an adversary, which is China, with respect to our supply of semiconductor chips,” Senator Kelly said.

On Monday, Biden also noted that the guardrails mean “we’re not going to allow these companies to use these funds to buy back stock or issue dividends.”

The bill also includes billions to bolster scientific training efforts to help the United States compete with China. In total, the National Science Foundation, the Department of Commerce and the National Institute of Standards and Technology distribute $52 billion in funding increases over the next several years for initiatives aimed at strengthening the competitiveness of the United States in areas such as building a “STEM workforce”

The bipartisan effort has spawned opposition from a swath of Republicans but also from one of Biden’s own allies. Senator Bernie Sanders (I-VT) called the bill a blank check “at a time when semiconductor companies are making tens of billions of dollars in profits and paying their executives exorbitant compensation.”

He also trashed the “guardrails” of the package, noting that companies could still outsource some jobs overseas and also use their profits to carry out share buybacks if they choose.

Despite opposition from Sanders and Republicans on Tuesday, lawmakers were nonetheless able to shut down the debate, arranging a vote for likely final passage later this week.

The House of Representatives will then likely consider the bill before adjourning Friday for its summer recess. Some conservative House Republicans are trying to stop him and have decided to calling it a “fake” Chinese bill. However, House Minority Whip Rep. Steve Scalise — who is responsible for counting the votes — seemed resigned to the idea that he could be directed to Biden’s office by the end of the week.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

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