Biden signs China competition bill to boost US chip production

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President Joe Biden on Tuesday is set to sign into law a bipartisan bill to invest trillions of dollars in domestic semiconductor manufacturing and scientific research, with the aim of boosting US competitiveness with China and other foreign rivals.

The signing marks a win for Biden, who campaigned on reaching across the aisle and has pushed Congress to pass the legislation as a matter of necessity for America’s economy and national security.

The bill, dubbed the Chips and Science Act, includes more than $52 billion for US companies producing computer chips, as well as billions more in tax credits to encourage investment in chip manufacturing. It also provides tens of billions of dollars to fund scientific research and development, and to spur the innovation and development of other US technologies.

The House and Senate passed the bill last week with near-unanimous Democratic support. One-third of Republican senators backed the bill, including Senate Minority Leader Mitch McConnell of Kentucky. Two dozen House Republicans also voted for it, although others withdrew their support on the eve of the final vote after Senate Democrats unveiled plans to quickly pass an unrelated partisan reconciliation bill.

Democrats want that tax-and-spending package, helmed by Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Joe Manchin, DW.V., to come to a vote before Congress leaves Washington, DC, for the August recess. They hope to pass it without needing Republican votes in the Senate, where the parties are split 50-50 and Vice President Kamala Harris holds the tie-breaking vote.

McConnell had previously warned Democrats that GOP lawmakers wouldn’t back the semiconductor bill if they continued to work on a reconciliation package. Talks between Schumer and Manchin on such a package had appeared to sputter weeks earlier — but just hours after the Senate voted to pass the Chips and Science act, the Democrats revealed that they had struck a deal.

Republicans reacted angrily, and the House minority whip’s office instructed GOP members in a late-night memo to oppose the chips bill when it came to a vote Thursday. “They lied about reconciliation,” House Minority Leader Kevin McCarthy, R-Calif., said on the morning of the vote.

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Democrats, meanwhile, celebrated the bill’s passage. “Now it goes to the White House for the president’s signature and a better future for our country,” House Speaker Nancy Pelosi, D-Calif., said in a ceremony at the Capitol on Friday morning.

Advocates say it is vital for the US to boost its production of semiconductors, which are increasingly critical components in a vast array of products including consumer electronics, automobiles, health care equipment and weapons systems.

Biden also has blamed the chip shortage for the sky-high inflation that has dogged his presidency. A lack of chips available for new car manufacturing has been linked to soaring prices for used cars, which are pushing inflation higher.

The chips have been in short supply during the Covid-19 pandemic. Factory shutdowns at the beginning of the outbreak sidelined chip production in Asia while consumer demand for autos and upgraded home electronics that needed the chips surged during the lockdowns. The US share of global chip production has also fallen sharply in recent decades, while China and other nations have invested heavily in the industry.

The US makes a few of the most advanced types of semiconductors, which are largely produced in Taiwan. Pelosi and a delegation of five House Democrats traveled to that island, the source of significant tensions with China, earlier Tuesday as part of an Asian tour.

The speaker said the trip is aimed at reaffirming US ties to its regional allies, including Singapore, Malaysia, South Korea and Japan. But China, which asserts control over Taiwan, has deployed increasingly belligerent rhetoric towards the US in response to the tour.

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