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Semiconductors: the US Senate validates a subsidy plan

With the support of Democrats and Republicans, the US Senate on Wednesday validated the semiconductor bill: 280 billion dollars to support a sector essential to modern technologies and an industrial policy intended to counter the competitive threat from China .

The vote reflects growing concern in both major US parties that America has no long-term solution to China’s technological and economic rise, a concern amplified by the pandemic. of Covid-19 and the Asian chip supply problems, which are penalizing a whole series of sectors.

The CHIPS and Science Act of 2022 provides $52.7 billion in direct financial assistance for the construction and expansion of semiconductor fabs and other programs, as well as $24 billion in tax and other measures .

The text will also give a serious boost to federal spending on scientific research, a sign that without additional investment, the United States may find it difficult to maintain its technological advantage.

“American supply chains will be more resilient, so we will never depend on foreign countries for the key technologies we need,” President Biden, a strong proponent of the project, said in a statement.

The bill was approved by 64 votes to 33, with 17 Republicans joining the Democrats, who voted “yes” unanimously. The agreement announced Wednesday night on the Democratic climate, health and tax bill annoys Republicans and could undermine their support for the semiconductor law, when this support will be needed to pass the text. by the House of Representatives.

Rick Scott, a Republican senator from Florida, calls the law “one of the most shameless giveaways to corporate America” ​​he’s seen in his life.

Critics of the text would have liked funding to be conditional on more commitments and question the relevance of massive support for a profitable sector. Rick Scott, a Republican senator from Florida, called the law “one of the most shameless giveaways to corporate America” ​​he had seen in his life.

By favoring a particular sector (that of semiconductor manufacturing, in this case), the United States is doing what it has long sought to avoid: industrial policy. Proponents of the project claim that this change in attitude is necessary for the country to remain competitive.

“In the 1970s and 1980s, our businesses were doing just fine without outside help,” said Senate Majority Leader Chuck Schumer in an interview. But in the 21st century, when countries like China and Germany are investing massively, should we just sit there and do nothing? The future of American workers, American economic dominance and our national security are at stake. »

The text has been in the works for more than three years. Chuck Schumer explained that he started discussing it in 2019 with Todd Young, a Republican senator from Indiana, when they saw each other at the Senate gym.

Intel, Taiwan Semiconductor Manufacturing, GlobalFoundries, Micron Technology, Applied Materials and others are among the companies that could qualify for funding.

Wednesday’s Senate vote was hailed by many business leaders. The text provides an envelope of 39 billion dollars for the manufacture of semiconductors, but also 11 billion for research on advanced semiconductors and the training of employees, as well as 2 billion intended to accelerate the realization of innovations in military or other applications.

“Virtually every company in the United States manufactures or uses semiconductors,” said Jason Oxman, chairman of the Information Technology Industry Council, which includes Intel, Toyota and tech giants like

Gary Cohn, the vice-president of IBM, had for his part called on parliamentarians to vote in favor of the bill. “We need to protect ourselves as a country and do everything to stay in the chip manufacturing business,” he said earlier this week.

The Senate approved another version of the text last year, but the legislative process stalled when the House of Representatives amended the text, adding billions of dollars for the fight against climate change as well as provisions relating to the immigration and marijuana. The debates bogged down for months.

Gina Raimondo, the Secretary of Commerce, campaigned with elected Democrats and Republicans, highlighting the national security issues induced by the fact that the United States depends on Taiwan or competing countries for their supply of semiconductors. In fact, most chips are not made in America.

Senior Pentagon officials traveled to the Capitol to discuss security issues. Meetings (sometimes weekly) have been organized by the White House with dozens of unions and professional associations.

The pressure mounted in June, when manufacturers like Intel and GlobalWafers (a Taiwanese producer that said it wanted to build a factory in Sherman, Texas) began saying their US expansion plans were conditional on the passage of the law.

In early June, during a meeting at the White House, members of the administration and Congress concluded that the scope of the bill should be reduced, reported the wall street journal a person who attended the event.

The parliamentarians withdrew the parts of the text on which they could not agree (i.e. the bulk of the provisions not related to semiconductors which had been added by the House of Representatives), but retained the elements related to the financing of research, because it is this which, according to them, will ensure the competitiveness of the United States in the long term.

“I’m not just worried about this law. I worry about the precedent it may set.”

Bernie Sanders

During the week of debate in the Senate, Bernie Sanders, an independent elected representative from Vermont, accused Patrick Gelsinger, the general manager of Intel, of blackmailing, recalling that the boss and his colleagues had indicated that they would invest in sites in Europe and Asia if the law was not passed before the summer.

“I’m not just worried about this law,” he said. I worry about the precedent it may set. “Companies that are ready to go overseas, that have ignored the needs of the American people, can now go to Congress and say, ‘Say, if you want us to stay here, you better give us an obol, ”added Bernie Sanders.

In a statement on Wednesday, Intel welcomed the Senate vote. Patrick Gelsinger recently wrote a column in the Wall Street Journal with Jim Farley, Ford’s chief executive, in which he asserted that this law was necessary for the United States “to be on an equal footing vis-à-vis of their foreign competitors.

“Without intervention, shortages of chips, including those used in the automotive, healthcare, and defense sectors, will persist as investment in the United States dwindles,” warned analysts. two men.

Sherrod Brown, a Democratic senator from Ohio, also criticized the semiconductor sector, saying that the supply problems came from the relocations undertaken previously by companies in the sector. He nevertheless supports the law because it should result in job creation in his state, where Intel plans to build a factory. “Ohio is on the verge of a major win,” he said.

In January, the computer giant warned that the construction of this factory would depend on the adoption of the law.

If the latter passes the House of Representatives stage (which should be the case), the Democrats will finally be able to boast of having achieved a goal, good news in a complicated year for Joe Biden’s program. Factories could take years to emerge.

Raphael Warnock, a Democratic senator from Georgia vying for re-election, spoke of the KIA plant in West Point, which has been forced to suspend production several times due to the shortage of chips. For him, the law will “reduce costs, create jobs in Georgia and ensure that the workforce keeps up with the evolution of the economy”.

Many parliamentarians also see the local interest of the other component of the text, which provides nearly 170 billion dollars over five years for research and development in several federal agencies.

By virtue of an evolution in the methods of distributing funds for research, part of the sum should benefit the rural States. In addition, 20 “regional technology hubs” are expected to be set up by the Commerce Department. Objective: to create technological jobs throughout the country.

R&D investments should relate to artificial intelligence, quantum computing, wireless communications and precision agriculture.

The National Science Foundation is set to receive $20 billion for the creation of a department specializing in security technologies, as well as $61 billion for its core business.

The Department of Energy’s office of science would get about $50 billion over five years for programs in clean energy, nuclear physics and high-intensity lasers.

Finally, the law includes new long-term policies for NASA: the space agency will have to give priority to the research work necessary to send Americans to Mars, as well as to the various programs, including the Artemis Moon program, thanks to at which the first woman and non-white person could set foot on the Moon.

Translated from the original English version by Marion Issard.

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