House Approves $280 Billion Bill To Boost Microchip Production And Counter China

Topline

The House passed the “CHIPS plus” bill in a bipartisan vote Thursday, sending to President Joe Biden’s desk a $280 billion package designed to boost domestic microchip production and make the U.S. more competitive against China.

The House of Representatives passed a bill to boost microchip production, sending it to Pres. … [+] Biden’s desk, where it’s expected to be passed into law. (Photo by Alex Wong/Getty Images)

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Key Facts

The bill passed 243 to 187, with 24 Republicans voting alongside 219 House Democrats even as Republican leadership opposed the bill, one day after the Senate passed it in a similarly bipartisan 64-33 vote.

The centerpiece of the bill is $52.7 billion in subsidies for U.S. computer chip manufacturing.

It also creates a 25% tax credit for semiconductor manufacturing, earmarks $1.5 billion for technology development for U.S. firms dependent on foreign telecommunications and appropriates $10 billion for the Department of Commerce to create 20 regional technology hubs.

Texas Rep. Michael McCaul, one of 24 Republicans who voted for the bill, called it a “national security” initiative that promotes U.S. jobs, a message that rang true on both sides of the aisle, in a rare show of bipartisan support for an economic policy.

What To Watch For

Biden is expected to sign the bill into law.

Key Background

Proponents of the bill have cast it as a way of easing the ongoing microchip shortage and helping the U.S. semiconductor industry catch up with East Asia, which produces roughly 75% of the world’s chips. The United States imports many of its high-tech chips from Taiwan, but China has expanded production recently. A strong domestic semiconductor industry is “critical to the economic growth and national security of the United States,” the Senate bill states. But passing it hasn’t been a walk in the park. Negotiations on a bill to support the domestic chip industry have dragged on for months, and Republican leaders—and Vermont Sen. Bernie Sanders (I)—have lambasted the proposal, as well as a previous version, with Sanders and Republicans like Sen. Pat Toomey (Penn.) calling it “corporate welfare” for large companies.

Crucial Quote

“The Chips and Science Act is exactly what we need to be doing to grow our economy right now,” Biden said in a statement Thursday, in the wake of soaring inflation and growing fears from economists that the United States may be entering a recession.

Chief Critic

House Republican leadership had urged party members to oppose the bill in a memo sent Wednesday night, hours after the Senate passed the bill and just minutes after Senate Majority Leader Chuck Schumer reached a deal with centrist West Virginia Sen. Joe Manchin (D) on a climate, healthcare and tax package. In the memo, first reported by The Hill, House Minority Whip Steve Scalise (R-La.) accused congressional Democrats of “pairing up a tone-deaf agenda that on one hand gives billions away in corporate handouts, and on the other hand undoes historic cuts implemented by Republicans.”

Surprising Fact

Rep. Sara Jacobs (D-Calif.), whose family owns the semiconductor and telecommunications company QualComm, was the lone House Democrat not to vote in favor of the bill, instead voting “present.”