Senate passes bill to expand U.S. car chip production

The Senate passed the CHIPS and Science Act, which provides $52 billion in subsidies for United States-based semiconductor production. $2 billion of this was allocated for older chips used in automotive applications. In theory, $81 billion more is earmarked for National Science Foundation research, equipment, and education over five years; and $10 billion for the National Institute of Standards and Technology; but the actual funding for these provisions was not provided.

Part of the money is a tax credit for investments in manufacturing, through 2026. The goal of the bill was to strengthen the U.S. economy, bring back semiconductor development and production jobs, and increase national security by avoiding reliance on possibly untrustworthy suppliers.

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Nobody is planning to make chips this old, but automakers do rely on prior-generation chips for cost reasons, to increase reliability and durability, and because auto parts don’t tend to change as often as cellphones.

The vote was 64-33, hailed as “bipartisan” with 17 out of 50 Republican and 47 of 49 Democrats voting in favor (there are also two independent senators who caucus with Democrats, Angus King and Bernie Sanders). Pundits had speculated that the bill’s sponsors would not be able to get ten Republican votes, especially after senate leader Mitch McConnell wanted to use it as leverage in other negotiations. Reportedly, chief executives of American automakers and other businesses acted through the Chamber of Commerce and similar organizations to obtain the needed votes.

The House has yet to pass its version, but it is expected to do so quickly.

China, South Korea, and Taiwan all have similar schemes in place to push semiconductor development and production within their borders. Some believe there are national security implications, since many chips used in telecommunications are only produced in Asia, and others are concerned that China could have too much control over the U.S. economy through the chips made there and in Taiwan, which the Chinese government has claimed is their property.


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