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Senate advances semiconductor bill to compete with China


The Senate voted to advance a slimmed-down version of its bill designed to spice up U.S. semiconductor competition with China.

The bill cleared a key procedural hurdle Tuesday evening in a 64-34 vote whilst lawmakers worked to complete various sections of the laws.

The bill, which would supply about $50 billion in subsidies to bolster U.S. computer chip manufacturing, is a multifaceted bipartisan effort that mixes the interests of several committees, starting from national security to economics.

The Senate’s procedural step forward on Tuesday paves the way in which for the chamber to carry a vote on final passage later this week or early next week. The bill would then travel to the House for passage before it could head to President Joe Biden’s desk for signature into law.

The broadest aim of the laws is to incentivize semiconductor production throughout the U.S. to diminish dependence on Asia-based manufacturers.

Sefa Ozel | E+ | Getty Images

Biden administration officials say a bigger domestic chip industry would help ease the provision chain disruptions which have hampered the economic recovery from Covid-19 and insulate the U.S. from supply routes dominated by political rival China.

A worldwide shortage of chips over the past two years rippled through several industries, including automakers, cell phone and consumer technology firms and defense systems manufacturers.

Sen. John Cornyn, a Texas Republican and lead writer of the Senate’s original text, stressed the economic implications of the laws in a pair of Twitter posts published Tuesday.

U.S. Senator John Cornyn (R-TX) speaks with reporters on the U.S. Capitol in Washington, DC.

Jon Cherry | Reuters

“If the US lost access to advanced semiconductors (none made in US) in the primary yr, GDP could shrink by 3.2 percent and we could lose 2.4 million jobs,” he wrote. “The GDP loss would 3X larger ($718 B) than the estimated $240 B of US GDP lost in 2021 as a result of the continued chip shortage.”

The centerpiece of the laws is $52 billion to rebuild domestic chip production and tax breaks to encourage the development of plants based within the U.S. Chip stocks rallied on Tuesday ahead of the expected vote, with Intel up 3.9%, Nvidia 5.5% higher and Texas Instruments rising 3.1%, all ahead of the broader S&P 500’s 2.8% gain.

The procedural step forward comes multiple yr after the Senate in a bipartisan vote first approved a $250 billion bill to bolster U.S. chipmaking and invigorate American research and development.

However the House never considered that laws after the Senate cleared it in June 2021.

House Democrats drafted their very own version of a Chinese competition act, with a gentler national security tone and a greater emphasis on climate change funding. Republicans opposed the bill.

Democrats in each chambers have for months attempted to reconcile differences between the 2 versions. With annual inflation running above 9% and the party set for tough midterm elections, the Biden administration has suggested it could approve a less complicated bill aimed toward just magnifying chip production.

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It is not certain whether Senate Democrats will find a way to garner the 60 votes needed to bypass a filibuster on final laws. Doing so would require support from several Republicans, who’ve lamented that much of their work to craft provisions to compete with China will likely be tossed.

Even top Democrats, including Foreign Relations Committee Chairman Bob Menendez of Recent Jersey, have decried the diluted bill.

“Now we’re at some extent where I do not think anybody really knows what the ultimate bill might seem like, or type of where the votes are,” Senate Republican Whip John Thune, R-S.D., told Politico last week. “We all know where the votes were last time. But that was a unique time and it was a unique bill than what we’re talking about today.”

But Democrats have also run into newer issues with Republicans, who’ve threatened to derail the semiconductor bill if Majority Leader Chuck Schumer, D-N.Y., continues to pursue a separate plan to pass a party-line bill on taxes and climate policy.

Other late-stage policy decisions could complicate matters further, including whether to drop tariffs on Chinese goods first imposed by former President Donald Trump.

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