On Tuesday, President Joe Biden signed a landmark bill to provide US $52.7 billion in subsidies for US semiconductor production and research and to increase efforts to make the United States more competitive with China's science and technology efforts.
Biden said the future is going to be made in America and called the measure a once-in-a-generation investment in America itself. Biden touted the investments that chip companies are making, even though it is not clear when the US Commerce Department will write rules for reviewing grant awards and how long it takes to underwrite projects.
Some Republicans joined Biden on the White House lawn to attend the signing of the chips bill that was years in the making in Congress.
Governors of Pennsylvania and Illinois, the mayors of Detroit, Cleveland, and Salt Lake City, and lawmakers attended the signing, as did the chief executives of Micron, Intel, Lockheed Martin, HP and Advanced Micro Devices.
The bill's passage spurred new chip investments, according to the White House. It said that Qualcomm will buy an additional US $4.2 billion in semiconductor chips from GlobalFoundries' New York factory, bringing its total commitment to US $7.4 billion in purchases through 2028.
The White House also announced a US $40 billion investment in memory chip manufacturing, which would boost US market share from 2 per cent to 10 per cent, an investment it said was planned with anticipated grants from the chips bill.
The bill is a gift to profitable chips companies that previously closed US plants, but Biden argued Tuesday that this law is not handing out blank checks to companies. The legislation aims to address a persistent shortage that has affected everything from cars, weapons, washing machines and video games. Thousands of cars and trucks are parked in southeast Michigan awaiting chips as the shortage continues to affect automakers.
A rare major foray into US industrial policy, the bill also includes a 25 per cent investment tax credit for chip plants, estimated to be worth US $24 billion.
The legislation authorises US $200 billion over 10 years to boost US scientific research to compete with China. Congress would still need to pass separate appropriations legislation to fund those investments.
China had lobbied against the semiconductor bill. The Chinese Embassy in Washington said China firmly opposes it, calling it reminiscent of a Cold War mentality. Biden noted that the United States needs chips for key weapons systems like Javelin missiles. Biden said that the Chinese Communist Party actively lobbied for US business against this bill.
Many US lawmakers said they normally wouldn't support subsidies for private businesses, but noted that China and the European Union had been giving billions of dollars in incentives for their chip companies. They cited national security risks and huge global supply chain problems that have hampered global manufacturing.