The CHIPS Act, originally designed to provide $52B in incentives for chipmakers to open US plants, has now passed a Senate vote, with bipartisan support. It is expected to pass a House vote as early as next week, but has gained weight in its journey through Congress.
Apple lobbied in favor of the original plan, stating that it was vital to the construction of a TSMC plant in Arizona, which is expected to make chips for the Cupertino company…
We recently outlined the background:
The Senate last year approved $52B in funding to boost US chip production, with the House adding its support in February of this year. The motivation was two-fold. First, to address the global chip shortage.
The shortage was created by a mix of factors. These include increased demand for technology during the pandemic, COVID-related production disruption, and a growing demand for chips by car-makers; as cars rely on increasing numbers of microprocessor units.
The biggest issue is not with CPUs and GPUs, but far more mundane chips like display drivers and power management systems. These relatively low-tech chips are used in a huge number of devices, including Apple ones.
Apple CEO Tim Cook revealed that supply constraints cost Apple $6B in two quarters, and warned that the hit could be as high as $8B in fiscal Q3.
A recent report says that there have been shortages across seven chip categories, and that four of them will continue to be affected throughout 2022.
Second, a desire to ensure that the US isn’t left behind by China – or left overly dependent on it.
Despite bipartisan support, politicians were having difficulties agreeing on the details, with some expressing concerns that the bill may not pass at all. The proposed subsidy has gone through various iterations, with different politicians wanting to add in funding for other issues, and it is this secondary funding which has caused controversy.
CHIPS Act expanded into broader $280B
An earlier vote was used as a test to see whether senators had the appetite to add additional funding for broader scientific, education, and defense spending. The vote indicated that there was indeed sufficient support for this.
The The New York Times reports that a revised CHIPS and Science Act has now passed a Senate vote, and that the total sum has now climbed to $280B.
The Senate on Wednesday passed an expansive $280 billion bill aimed at building up America’s manufacturing and technological edge to counter China, embracing in an overwhelming bipartisan vote the most significant government intervention in industrial policy in decades.
The legislation reflected a remarkable and rare consensus in a polarized Congress in favor of forging a long-term strategy to address the nation’s intensifying geopolitical rivalry with Beijing. The plan is centered around investing federal money into cutting-edge technologies and innovations to bolster the nation’s industrial, technological and military strength.
The measure passed 64 to 33, with 17 Republicans voting in favor. The bipartisan support illustrated how commercial and military competition with Beijing — as well as the promise of thousands of new American jobs — has dramatically shifted longstanding party orthodoxies, generating agreement among Republicans who once had eschewed government intervention in the markets and Democrats who had resisted showering big companies with federal largess.
A cynic might suggest that a much larger pot of money will see funds sent to a greater number of Senate constituencies, allowing senators to boast about how many jobs they’ve created in their state – just in time for the midterms.
Whatever the reason, though, some much-needed investment in scientific research is to be welcomed.
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