After passing the House, the $52 billion chips bill faces a new hurdle

After months of stagnation, the House voted in favor Friday of legislation that would create billions of dollars in subsidies for semiconductor companies building factories in the U.S.

The proposed law, the America Competes Act, is broadly aimed at China’s growing global influence, but it includes roughly $50 billion in funding to subsidize chip manufacturing, research and development in the U.S. The legislation is broadly supported by the chip industry. The benefits are clear: Funding for new chip factories, or fabs, would help the companies that build them and the fabless businesses such as AMD, Nvidia and Qualcomm that rely on contractors to manufacture their products.

“We're excited that the House and the Senate agree on the need to provide the manufacturing and R&D incentives that our industry needs to maintain America's leadership role,” Intel Vice President of U.S. Government Relations Al Thompson told Protocol in a phone interview. “And we're looking forward to the House and Senate reconciling their bills to get something to the president's desk sooner rather than later.”

The U.S. share of chip manufacturing has dropped to roughly 12% from nearly 40% over the last 30 years. And because semiconductors are becoming an increasingly important part of the global economy, political tension — between the U.S. and China, for example — has prompted the U.S. and other countries to seek to increase their chip manufacturing capacity. Geopolitical tension has been compounded by the chip shortage triggered by COVID-related supply disruptions and big changes to people’s buying habits.

A similar piece of legislation to the House bill passed the Senate last year with bipartisan support. According to people familiar with the process, the House version stalled because the Democrats prioritized other laws ahead of it. The House bill, which received more than 500 amendments, is unlikely to make it to the president’s desk in its current form as many of the additions are not in the Senate version of the bill.

The proposed law will undergo a reconciliation process with the Senate that could take weeks or months as the midterm election approaches.

Biden said at a recent event unveiling new Intel factory construction in Ohio that the administration supports chip subsidies, and urged Congress to pass the $52 billion package.