New Government Bill Could Improve The Chip Shortage

Industry News / 5 Comments

The bipartisan deal gives $52 billion for semiconductor factories.

  • Chips and Science Act passes in 243-187 vote
  • $280 billion deal with $52.7 billion to build new semiconductor factories
  • Questions arise about excess spending

The global semiconductor chip shortage has greatly impacted the automotive industry, and car companies and consumers are suffering as a result. Luckily, help is on the way from a new bill called the Chips and Science Act of 2022, which just passed through the House in a 243-187 vote. All that's left is for the bill to reach President Joe Biden's desk for a signature. The $280 billion bipartisan deal includes $52.7 billion in subsidies meant to encourage companies to manufacture chips here in the United States. In addition, companies that build semiconductor plants will receive 25% investment tax credit (valued at $24 billion).

There's also plenty of excess spending packed in that doesn't directly appear relevant to solving the chip shortage. Some examples include $81 billion for the National Science Foundation, $67.9 billion for the Department of Energy, $11 billion for the Department of Commerce, and $10 billion for the National Institute of Standards and Technology.

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"For decades, some 'experts' said we needed to give up on manufacturing in America. I never believed that. Manufacturing jobs are back," President Biden said in a public statement on Wednesday. "Thanks to this bill, we are going to have even more of them."

Some Democratic senators believe the final wording of the bill appropriates too much funding with sparse oversight. "There is no debate that the microchip and semiconductor shortage is a dire threat to our nation," said Vermont Senator, Bernie Sanders. "What I cannot understand is why so many in Congress are so eager to pay this bribe?"

"Although this is not a perfect bill and not the one I would have written, it is a step in the right direction toward keeping Communist China at bay and protecting our nation's economic and security interests," Oklahoma Representative Tom Cole, one of 24 House Republicans who voted to approve the bill, said in defense of the bill.

It may take some time, but by giving companies more incentives to build factories here in the US, we could theoretically lower the price of semiconductor chips and improve the supply chain. We've already seen the shortage have major implications for the automotive industry. Ford was recently forced to shut down Mustang production and production of the F-150 pickup truck in 2021, Subaru was forced to suspend all Japanese factories, and GM was forced to park nearly 100,000 complete vehicles without chips in empty parking lots.

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