WASHINGTON (Reuters) – President Joe Biden signed a landmark bill on Tuesday to provide $52.7 billion in subsidies for U.S. semiconductor production and research and bolster efforts to to make the United States more competitive with China’s science and technology efforts.
“The future is going to be made in America,” Biden said, calling the measure “a once-in-a-generation investment in America itself.”
Biden touted investments made by chip companies, though it’s unclear when the U.S. Commerce Department will write rules for reviewing grants and how long it will take to underwrite projects.
Some Republicans joined Biden on the White House lawn to witness the signing of the chip bill that took Congress years to complete.
Chief executives from Micron, Intel, Lockheed Martin, HP and Advanced Micro Devices attended the signing, as did the governors of Pennsylvania and Illinois, the mayors of Detroit, Cleveland and Salt Lake City, and lawmakers.
The White House said passage of the bill spurred new investment in chips. He noted that Qualcomm on Monday agreed to buy an additional $4.2 billion of semiconductor chips from GlobalFoundries’ New York factory, bringing its total commitment to $7.4 billion in purchases through 2028.
The White House also touted Micron’s announcement of a $40 billion investment in memory chip manufacturing that would boost US market share from 2% to 10%, an investment that, according to her, was planned with “advance subsidies” from the chip bill.
Progressives have argued that the bill is a giveaway to profitable chip companies that previously shuttered U.S. factories, but Biden said Tuesday that “this law doesn’t hand out blank checks to companies.”
The legislation aims to alleviate a persistent shortage that affects everything from cars and weapons to washing machines and video games. Thousands of cars and trucks remain parked in southeast Michigan awaiting microchips as the shortage continues to impact automakers.
A rare major foray into US industrial policy, the bill also includes a 25% investment tax credit for chip factories, estimated at $24 billion.
The legislation authorizes $200 billion over 10 years to boost American scientific research to better compete with China. Congress would still need to pass separate appropriations legislation to fund these investments.
China had lobbied against the semiconductor bill. The Chinese Embassy in Washington said China “strongly opposes it”, calling it a “Cold War mentality”.
Many U.S. lawmakers said they wouldn’t normally support large subsidies to private companies, but noted that China and the EU have given billions in incentives to their chip companies. They also cited national security risks and huge global supply chain issues that have hampered global manufacturing.