Chip subsidies are popular in Congress. They still might fail.

The Democrats have an ambitious legislative agenda following the July recess. Chip subsidies hang in the balance, and Sen. Mitch McConnell wants Democrats to stay focused on them.


USICA — and its $52 billion in subsidies for domestic chip manufacturing — no longer seems to be a sure thing.

Photo: Chris Ratcliffe/Bloomberg via Getty Images

Congressional Democrats are in need of a signature legislative win ahead of the midterms, and the United States Innovation and Competition Act could be exactly that. Chipmakers including Intel, Samsung and TSMC have forged ahead with plans to build fabrication facilities in the U.S., trusting that Congress will eventually sort things out and pass the bill.

But with Congress currently suspended for a tense July recess, the USICA — and its $52 billion in subsidies for domestic chip manufacturing — no longer seems to be a sure thing.

The industry’s patience is wearing thin. In June, Intel made the largely symbolic move of delaying its groundbreaking ceremony for its Ohio fabrication facility, which ultimately could involve an investment of around $100 billion. A TSMC board member also recently warned the timing of the $12 billion Arizona factory completion would depend on Congress passing subsidies.

Major industry players are heading to D.C. to lobby for the subsidies, which have significant bipartisan support but are ensnared in thousand-page-long bills, their political baggage dragging them down.

IBM’s vice president of government and regulatory affairs, Chris Padilla, said the company plans to fly employees to D.C. in the coming weeks to hold hundreds of meetings with policymakers. “We’re planning to spend this month making an all-out push,” he told Protocol.

Unfortunately for Democrats, Senate Minority Leader Mitch McConnell understands their need for a legislative win and intends to use it against them. At the end of June, he tweeted: “Let me be perfectly clear: there will be no bipartisan USICA as long as Democrats are pursuing a partisan reconciliation bill.”

Meanwhile, Senate Majority Leader Chuck Schumer is forging ahead with an ambitious legislative agenda that includes USICA and a new version of the failed Build Back Better bill. The resurrected Build Back Better deal is expected to introduce prescription drug pricing reforms, extend Affordable Care Act subsidies, raise some taxes and provide as much as $300 billion in subsidies for green energy initiatives. Further complicating things, Democrats also face pressure to make good on long-awaited promises to pass their tech antitrust bills and to codify Roe v. Wade.

“What could happen from all this is that you wind up getting nothing,” said Padilla. He added that as Congress nears the end of session, “everything gets linked to everything else — and then what you get usually is a grand bargain or nothing.”

Even if the Democrats go along with McConnell’s demand to only focus on USICA, the reconciliation process won’t be easy. The House and Senate both already passed versions of the bill, but with major differences in partisan slants: The House’s COMPETES Act passed with only one Republican vote in February, while the Senate USICA bill passed with a healthy bipartisan coalition of 68 votes at the end of March.

“It is critical to get the bipartisan Innovation Act to the president’s desk before the end of August,” Rep. Ro Khanna, one of the bill’s co-sponsors, told Protocol. “We cannot continue to blow by deadline after deadline for a bill to create thousands of good, paying jobs and ensure the United States remains competitive with China.”

Key differences between the House and Senate versions center on trade and immigration: Only the House version of the bill includes a renewal of trade adjustment assistance programs and plans to expand the immigration system for high-skilled tech workers. The proposed immigration reforms exempt foreign-born workers with doctoral degrees in STEM fields from annual green card limits that often force them to leave the U.S.

These difficulties won’t easily be resolved, so the chip industry has a backup plan: get the subsidies stripped out and passed on their own.

One Republican staffer told Protocol the USICA package seems to be falling down the priority list for Democrats. The staffer said Democrats are now more inclined to focus on issues that would appeal to voters ahead of midterms, such as the drug pricing reforms.

The semiconductor subsidies aren’t likely to do much for voters, unless maybe they happen to live near proposed facilities. Congressional approval ratings have continued their steady decline to just 16% in June. Inflation, gun control and abortion access have emerged as key issues heading into elections. McConnell’s bargain would force the Democrats to prioritize USICA, with the intended consequence of hamstringing a bill that includes tax hikes.

That leaves the possibility that nothing at all gets passed — not USICA, and not the skinny package focusing on subsidies. In that case, the chip industry would likely find itself working with a Republican, business-friendly Congress after midterms, and it would still have a shot at getting the subsidies then.

That makes it all a question of timing: The chip industry and its champions in government have argued that nations such as Japan, Germany and France will lure chipmakers away from the U.S. with their own subsidy packages, which are already on the table.

“Mark my words ... if Labor Day comes and goes and this Chips Act isn't passed by Congress, these companies will not wait, and they will expand in other countries,” Commerce Department Secretary Gina Raimondo warned at the end of June.


Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.


Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories