$52 billion for chips manufacturing picks up steam in Congress

Senate Majority Leader Chuck Schumer said Monday that Democrats and Republicans were “hashing out the final details on a bill so we can move forward this week.” He set a procedural vote for Tuesday.

The Biden administration, lawmakers from both parties and the semiconductor industry have called the chips incentives urgent amid a global shortage and supply chain disruptions that have affected industries including automobiles, electronics and appliances.

“This is a matter of national security,” said Sen. Debbie Stabenow, a Michigan Democrat.

The legislation is a scaled-down version of a more expansive bill intended to make the U.S. more competitive with China in technology and advanced manufacturing. That legislation has been hung up in negotiations between the House and Senate over how to merge their different versions.

In addition to the chips money, a draft bill circulated by the Senate leadership includes a 25 percent investment tax credit for manufacture of semiconductors and tools to create semiconductors, $500 million for an international secure communications program, $200 million for worker training and $1.5 billion for public wireless supply-chain innovation, according to a copy of the text obtained by Bloomberg.

However, Sen. Todd Young, an Indiana Republican who with Schumer was one of the co-sponsors of the original competitiveness bill, wants to include provisions that would establish a directorate for technology and innovation within the National Science Foundation to support basic and applied research and bolster education in science, technology, engineering and mathematics. Young conditioned his vote for the bill on those provisions being added into the draft.

Sen. John Cornyn, a Texas Republican, said multiple senators “are very invested in” that portion of the legislation. “You may find some people who say that’s not enough,” to provide the incentives for chip manufacturing.

In the House, Ways and Means Chair Richard Neal said he was pushing for the House version of the investment tax credit to be used rather than Senate version. The House also would have to pass legislation before it could go to President Joe Biden’s desk.

The bill text also includes a provision that would bar companies that receive assistance from the U.S. government from any “material expansion of semiconductor manufacturing capacity in the People’s Republic of China” or another foreign country of concern for 10 years after the award date. That restriction would also apply to new investments in Russia, according to a person familiar with the matter. It would not apply to “legacy” chips, as older technology is called.

Some companies have raised concerns about some of the language in that section, arguing it’s unnecessarily restrictive and could hurt their competitive advantage in the long run. The dispute is highly technical and centers on the types of chips and their relative performance attributes, certain types of which would be off limits for manufacturers despite already being produced in China. The industry is trying to balance politics, policy and a dynamic business environment, a person familiar with the matter said.

The White House has blessed the…