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If all goes as planned, Congress will finally start voting on funding the CHIPS Act on Tuesday.
On Monday, U.S. Senate Majority Leader Chuck Schumer (D–N.Y.) said the Senate would vote on $52 billion in government subsidies for domestic semiconductor or chip manufacturing as its own separate bill on Tuesday. The funding was originally part of a larger competition and innovation bill, which was held up in Congressional negotiations.
"We need to move quickly," Schumer said. "Without these incentives from Congress, the capital investment required for expanding production is not economically viable in the United States.”
After the Senate vote, the House of Representatives will still need to approve the CHIPS Act funding before submitting it to the White House for signing. Congressional leaders are operating on a tight schedule, hoping to get funding passed before Congress goes on recess on Aug. 8.
Passing CHIPS Act funding into law will be a victory for chipmakers like Intel Corporation, Taiwan Semiconductor Manufacturing Corporation, and GlobalWafers, who claim their planned U.S. projects depend on getting government money. Intel CEO Pat Gelsinger has been particularly vocal in pressuring Congress. The company delayed the groundbreaking ceremony on its $20 billion project in Ohio to protest the slow passage of the CHIPS Act. In late June, Gelsinger said that without CHIPS Act money, the chipmaker was likely to shift production to Europe, which offers its own government subsidies.
Despite chipmakers advocating for the bill's passage, semiconductor manufacturers aren’t happy with everything that may end up in the final legislation.
The biggest point of contention relates to China—specifically, the restrictions on investing in China that will apply to companies that receive CHIPS Act money.
The CHIPS Act funding comes with so-called guardrails meant to ensure that U.S. subsidies are spent on building factories in the U.S. and not put towards some other purpose. One provision prevents recipients of CHIPS Act funding from expanding production of advanced chips in China, which would further escalate U.S. efforts to prevent China from producing the components that power nearly all of today's digital devices, from phones and tablets to cars and servers.
Lawmakers worry that recipients of Chips Act funding could undermine U.S. security by expanding production in rival countries like China and thus want to impose conditions on chipmakers that get public money.
Chipmakers like Intel are lobbying to loosen those guardrails, reports Politico. One draft of the legislation barred funding recipients from producing semiconductors smaller than 28 nanometers in China. While chips of that size are still used in some consumer electronics, the most advanced chips used in smartphones and tablets are much smaller, meaning the proposal would prohibit chipmakers from churning out their most innovative technology on Chinese soil.