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Creative Commons

The U.S. Senate has passed a bipartisan bill that will provide billions of dollars to boost domestic semiconductor production to help navigate a global shortage of microchips.

The CHIPS and Science Act or "CHIPS-plus" earmarks $52 billion in government subsidies for U.S. semiconductor research, design and production, including $2 billion for "legacy chips" used by automakers and parts suppliers.

The bill also includes a 25% tax credit for investments in semiconductor manufacturing through 2026 and invests billions in science and technology innovation to strengthen economic growth, job creation and national security.

The Senate passed the legislation on a 64-33 vote. It now heads to the U.S. House of Representatives, where it is expected to pass as early as this week.

This bill represents a trimmed-down version of previous legislation to address the global semiconductor shortage and other supply chain disruptions. The earlier legislation also sought to improve U.S. competitiveness with countries such as China, Taiwan and South Korea, as well as the European Union.

Funding for CHIPS (Creating Helpful Incentives to Produce Semiconductors for America) Act was part of the U.S. Innovation and Competition Act passed in 2021.

The legislation has been slammed by some critics, including Sen. Bernie Sanders, who calls it a "blank check to the microchip industry."

Republican Sen. Pat Toomey, of Pennsylvania, has referred to the bill as a "corporate welfare handout" to "an extremely sophisticated, profitable industry in the U.S. — semiconductor manufacturing."

However, the Alliance for Automotive Innovation commended the Senate’s passage of the bill and urged the House to pass it too.

"Other countries are taking aggressive steps to get ahead of the United States on semiconductor production. By investing in American-made chips today, our country will be in greater control of its own destiny tomorrow — not to mention less reliant on foreign suppliers and governments," alliance CEO John Bozzella told Automotive News.

In June, major automakers and industry suppliers urged Congress to quickly pass bipartisan competitiveness legislation that included the CHIPS Act.

“There is not a single supply-chain shortage with a greater impact on the U.S. economy than the shortage of automotive-grade semiconductors,” the American Automotive Policy Council said in a statement Monday.

The critical shortage of chips has caused U.S. automakers to trim production by 1.5 million vehicles and has led to a critical shortage of new vehicle inventories.

Originally posted on Auto Dealer Today

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