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Biden to sign bill to boost chipmakers, compete with China Aug. 9 – White House
Home > Top Stories > Biden to sign bill to boost chipmakers, compete with China Aug. 9 – White House
Global Banking & Finance Review®
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By David Shepardson
WASHINGTON (Reuters) – President Joe Biden next Tuesday will sign a bill to subsidize the U.S. semiconductor industry and boost efforts to make the United States more competitive with China, the White House said on Wednesday.
The legislation aims to alleviate a persistent shortage that has affected everything from cars, weapons, washing machines and video games. Thousands of cars and trucks remain parked in southeast Michigan awaiting chips as the shortage continues to impact automakers.
A rare major foray into U.S. industrial policy, the bill provides about $52 billion in government subsidies for research and U.S. production of semiconductors. It also includes an investment tax credit for chip plants estimated to be worth $24 billion.
“The bill will supercharge our efforts to make semiconductors here in America,” Biden said Tuesday.
The legislation authorizes $200 billion over 10 years to boost U.S. scientific research to better 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 opposed” it, calling it reminiscent of a “Cold War mentality.”
Many U.S. lawmakers had said they normally would not support hefty subsidies for private businesses but noted that China and the European Union have been awarding billions in incentives to their chip companies. They also cited national security risks and huge global supply chain problems that have hampered global manufacturing.
Some progressive lawmakers had raised concerns about the size of government grants to profitable chip companies.
The Commerce Department said Friday it will limit the size of government subsidizes for semiconductor manufacturing and will not let firms use funding to “pad their bottom line.”
Congressional Progressive Caucus chair Pramila Jayapal said the group backed the legislation after lengthy negotiations with Commerce Secretary Gina Raimondo after the group expressed concerns chips companies would use funding for stock buybacks or pay dividends.
(Reporting by Katharine Jackson and Doina Chiacu; Editing by Caitlin Webber, William Maclean)
An investment tax credit is a tax incentive that allows businesses to deduct a certain percentage of their investment costs from their tax liability, encouraging capital investment.
U.S. competitiveness refers to the ability of the American economy to produce goods and services that meet the test of international markets while maintaining or expanding the real incomes of its citizens.
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