US Congress Passes CHIPS Act, Sends it to Biden’s Desk

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After years of being stuck in legislative gridlock, the CHIPS act has finally passed both the House and the Senate. It will now proceed to President Biden’s desk, where it will be signed immediately. The passage of the bill by the House marks the end of a tumultuous legislative journey for the bill, which will provide billions in subsidies for US-based semiconductor manufacturing. The bill passed 243-187, with every Democrat and twenty-four Republicans voting for the bill.

The full name of the bill is the Chips and Science Act of 2o22. It provides more than $52 billion to bolster US silicon manufacturing efforts, as well as billions more in tax credits for companies investing in similar efforts. The bill earmarks $39 billion for US firms that want to “build, expand, or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packaging, or research and development, including $2 billion specifically for mature semiconductors.” Additionally, $11 billion is earmarked for a public-private partnership with the National Semiconductor Technology Center (NSTC). This will provide funds to conduct “advanced semiconductor manufacturing R&D and prototyping; invest in new technologies; and expand workforce training and development opportunities.”

Intel’s will be using funds from the CHIPS Act for the construction of its new Ohio “megafab”. (Image: Intel)

The bill has long been seen as a crucial step in allowing American silicon manufacturers like Intel to increase their fab capacity at home. This could provide some reassurance that American companies wouldn’t have to depend on Taiwan’s TSMC so much. The US Commerce Secretary recently issued a stark warning about this very real possibility on CNBC. She noted that the top US chip designers like Apple, AMD, and Nvidia purchase 90 percent of their silicon (and probably upwards of 90 percent of their highest-performing silicon) from Taiwan. This leaves those companies and the US economy as a whole vulnerable to actions by countries like China. AMD still builds I/O dies with GlobalFoundries, but Zen 4 will move away from that.

The CHIPS Act is meant to bolster the US’s position in the industry, especially with regards to advanced nodes. Right now the most advanced processes are all made overseas, and none exist in the US. Intel is aiming to change that, so that one day companies won’t have to rely on TSMC for the most cutting edge technology. Still, those plans will take years to come to fruition, even if the money spigot opens at 8am on Monday morning.

The news will be music to Intel CEO’s Pat Gelsinger’s ears. He’s been pushing for the act, and has said the company needs the funds to help build its recently announced “megafab” in Ohio. Just a few weeks ago the company delayed the groundbreaking ceremony for the fab after the CHIPS act became stalled in Congress. Gelsinger said if the funds weren’t delivered, it would severely impact the company’s expansion plans in the US.

Not everyone is pleased with its passage though, as chip design companies like AMD and Nvidia were reportedly unhappy with the bill as it could disproportionately favor Intel. Those companies supported a different version of the bill, which also provided subsides for chip designers. “It’s going to benefit just a few companies,” said one person from a chip design company, who declined to be identified to CNBC.

Regardless, Biden will sign the bill into law post-haste. In a statement, the President said “The CHIPS and Science Act is exactly what we need to be doing to grow our economy right now. By making more semiconductors in the United States, this bill will increase domestic manufacturing and lower costs for families.  And, it will strengthen our national security by making us less dependent on foreign sources of semiconductors.  I look forward to signing this bill into law and continuing to grow our economy from the bottom up and middle out for working families all across the country.”

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