A rare major foray into US industrial policy, the bill provides about $52 billion (roughly Rs. 4,11,400 crore) in government subsidies for research and US production of semiconductors. It also includes an investment tax credit for chip plants estimated to be worth $24 billion (roughly Rs. 1,89,800 crore).
“The bill will supercharge our efforts to make semiconductors here in America,” Biden said Tuesday.
The legislation authorizes $200 billion (roughly Rs. 15,82,000 crore) over 10 years to boost US scientific research to better compete with China. Congress would still need to pass separate appropriations legislation to fund those investments.
China had lobbied against the semiconductor bill. The Chinese Embassy in Washington said China “firmly opposed” it, calling it reminiscent of a “Cold War mentality.”
Many US lawmakers had said they normally would not support hefty subsidies for private businesses but noted that China and the European Union have been awarding billions in incentives to their chip companies. They also cited national security risks and huge global supply chain problems that have hampered global manufacturing.
Some progressive lawmakers had raised concerns about the size of government grants to profitable chip companies.
The Commerce Department said Friday it will limit the size of government subsidizes for semiconductor manufacturing and will not let firms use funding to “pad their bottom line.”
Congressional Progressive Caucus chair Pramila Jayapal said the group backed the legislation after lengthy negotiations with Commerce Secretary Gina Raimondo after the group expressed concerns chips companies would use funding for stock buybacks or pay dividends.
© Thomson Reuters 2022