U.S. to vote on bill to boost computer chip production

House Democrats are poised to approve legislation on Feb. 4 that they say positions the United States to better compete with China economically and on the global stage by strengthening the domestic semiconductor industry, shoring up strained supply chains and bolstering international alliances.

Criticizing China has become a bipartisan playbook in Washington, but Republicans are panning the measure as “toothless” and short of what is needed to hold the country accountable for a range of economic and human rights actions.

The nearly 3,000-page bill includes massive investments designed to boost semiconductor manufacturing in the U.S. The big-ticket items include about $52 billion in grants and subsidies to help the semiconductor industry and $45 billion to strengthen supply chains for high-tech products.

But Democrats also tucked in other priorities that have raised GOP concerns about the bill’s cost and scope.

It includes $8 billion for a fund that helps developing countries adjust to climate change; $3 billion for facilities to make the U.S. less reliant on Chinese solar components; $4 billion to help communities with significantly higher unemployment than the national average; and $10.5 billion for states to stockpile drugs and medical equipment.

That’s just a sliver of the package, which House Speaker Nancy Pelosi, D-Calif., said was needed to ensure “America can out-compete any nation, today and for decades to come.”

The bill gives Democrats a chance to address voter concerns about the economy at a time when a shortage of computer chips has led to higher prices for automobiles, electronics and medical devices. Republicans, who for months have hammered Democrats over rising inflation, say the bill has little to do with winning the economic competition with China and wastes taxpayer dollars on environmental initiatives and other unnecessary programs.

“This bill is actually just a long list of progressive dream policies that have nothing to do with China at all,” said Rep. Michelle Fischbach, R-Minn.

Commerce Secretary Gina Raimondo met with House Democratic lawmakers on Feb. 2 to discuss the bill. She said American manufacturing has been on a decline for more than three decades, leading to a loss of jobs and know-how.

“In the process of that slow atrophy we’ve become incredibly dependent on countries across the world,” Raimondo said. “And, so, what this bill is saying is stop the decline.”

One of the biggest flashpoints is the $8 billion in the legislation to help developing countries reduce their emissions and cope with climate change. President Barack Obama pledged $3 billion toward the fund, but former President Donald Trump withheld $2 billion of that.

Meanwhile, America’s share of semiconductor manufacturing globally has steadily eroded from 37% in 1990 to about 12% now. The Biden administration and lawmakers are trying to reverse that trend, which industry officials say is driven by foreign competitors receiving significant government subsidies.

The pandemic has strained the supply chain for the chips. The Commerce Department issued a report last week that found the median inventory of some semiconductor products had fallen from 40 days in 2019 to less than five days in 2021.