Senate Set to Pass Semiconductor Support Bill

The Senate is expected to take up and pass bipartisan legislation designed to support the domestic production of semiconductor chips that are in very short supply in many production supply chains. The bill is titled the Creating Helpful Incentives to Produce Semiconductors for America (CHIPS for America) Act.

Efforts to rebuild American microchip manufacturing have been ongoing for a number of years in order to protect the U.S. from overdependence on Chinese producers. The bill has faced a number of setbacks in the Senate but was advanced when it became apparent that it would survive the cloture vote needed to get past the 60-vote filibuster threshold.

If the CHIPS for America Act makes it past the cloture vote as expected, it is likely to be given a final floor vote shortly thereafter.

The bill has been scaled down from the earlier proposed U.S. Innovation and Competition Act that passed in the Senate last year but stalled out in the House. The House eventually passed its own revised version of the legislation in February, which is titled the America COMPETES Act.

The bill was thrown into an uncertain future last month when Senate Minority Leader Mitch McConnell (R-KY) used it as leverage against Democratic efforts at a party-line reconciliation bill. Several GOP senators backed McConnell’s effort, including some of the CHIPS for America Act sponsors.

The threat to the bill eventually passed when Sen. Joe Manchin (D-WV) withdrew his support of a reconciliation bill including tax and climate provisions that Republicans were fighting against.

The current form of the CHIPS for America Act will provide $52 billion in taxpayer-funded grants to private semiconductor producers. It also includes a 25% investment tax credit for chip companies. A half-billion dollar allocation is set to create a new international secure communications program and pay for domestic chip manufacturing worker training programs.

The shortage of microchips in the U.S. has disrupted the production and distribution of many major consumer electronic goods. Lawmakers from both parties have been calling for programs that will boost domestic chip production to stabilize and secure the American supply chain.

Speaker Nancy Pelosi sent a letter last week to lawmakers saying she is optimistic that the House will take up the bill shortly after it passes in the Senate.

Senate Majority Leader Chuck Schumer (D-NY) had expected to bring the cloture vote up on Monday but delayed the vote because some senators faced travel problems related to severe weather in the midwest during the day. It was eventually brought up on Tuesday morning and passed cloture by a 64-32 vote.