Senate Advances Bill to Boost Domestic High-Tech Manufacturing

The Senate on Monday advanced legislation that would aim to boost domestic production of high-tech goods to better compete against China.

The Senate voted to invoke cloture, or limit debate on legislation, on the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, a $280 billion package that would boost domestic semiconductor chip manufacturing and high-tech research.

The Senate invoked cloture, 64-32:

Invoked, 64-32: Motion to concur in the House amendment, to the Senate amendment, to H.R.4346, the legislative vehicle for the CHIPS-Plus Act, with further amendment (Senate Amendment 5135).

— Senate Cloakroom (@SenateCloakroom) July 26, 2022

The legislation would provide:

• $52 billion in financial incentives to the semiconductor industry
• $80 billion in increased funding to universities through the National Science Foundation (NSF)
• $50 billion in funding for research at the Department of Energy (DOE)
• $1.5 billion to spur mobile broadband development
• The legislation also has a 25 percent investment tax credit for investments in semiconductor manufacturing

The Senate will take up the bill later this week, likely holding a final vote on Wednesday. The Senate voted to proceed last week on the CHIPs bill, which received strong Democrat support and a lot of support from Republicans.

Although many Republicans support the legislation, others believe it could use some improvement.

Sen. Tom Cotton (R-AR) introduced an amendment to the bill on Monday that would prohibit companies that receive federal grants and tax credits from expanding semiconductor production in China.

“We should be bolstering manufacturing at home — not expanding abroad. My amendment will ensure companies that receive taxpayer funds can’t turn around and build more factories in China,” Cotton said on Monday. 

Many Republicans have supported the bill across the spectrum, including former Secretary of State Mike Pompeo, who has been lobbying House Republicans to support the bill.

“Congress must pass the CHIPS Act for both our national and economic security,” Pompeo wrote on Monday. “We have to become less dependent on China for critical technologies — and this is how we do it.”

Congress must pass the CHIPS Act for both our national and economic security. We have to become less dependent on China for critical technologies — and this is how we do it.

— Mike Pompeo (@mikepompeo) July 25, 2022

Top Republicans support the bill, including Rep. Michael McCaul (R-TX), the ranking member of the House Foreign Affairs Committee, Rep. Mike Turner (R-OH), the ranking member of the House Intelligence Committee, and Rep. John Katko (R-NY), the ranking member on the House Homeland Security Committee.

The legislation also has its detractors, including the Heritage Foundation. Foundation President Kevin Roberts said the bill amounts to corporate handouts and increased funding for federal agencies.

“The Chinese Communist Party represents a threat to American values, interests, and freedoms unlike any other we have faced in our history. Unfortunately, the CHIPS Act does little to counter those threats and protect our way of life,” Roberts said.

Oren Cass, the executive director at the American Compass, said America needs “significant public spending” to better compete in advanced semiconductor manufacturing against Taiwan, South Korea, and China.

The House will take up the bill after the Senate passes the legislation, where it will likely pass.