Biden signs China competition bill to boost U.S. chip production

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President Joe Biden is set to sign into law on Tuesday a bipartisan bill to invest billions of dollars in domestic semiconductor manufacturing and scientific research, in a bid to bolster U.S. competitiveness with China and other foreign rivals.

The signing marks a victory for Biden, who campaigned to reach the other side of the aisle and pushed Congress to pass the legislation as a necessity for America’s economy and national security.

The law project, dubbed the Chips and Science Act, includes more than $52 billion for U.S. companies producing computer chips, plus billions more in tax credits to encourage investment in chip manufacturing. It also provides tens of billions of dollars to fund scientific research and development and to spur innovation and the development of other American technologies.

The House and Senate passed the bill last week with near-unanimous Democratic support. A third of Republican senators supported the bill, including Senate Minority Leader Mitch McConnell of Kentucky. Two dozen House Republicans also voted in favour, though others withdrew their support on the eve of the final vote after Senate Democrats unveiled plans to quickly pass an unrelated partisan reconciliation bill. .

Democrats want this tax and spending package, led by Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Joe Manchin, DW.V., put to a vote before Congress leaves Washington, DC, for August vacation. They hope to pass it without needing Republican votes in the Senate, where the parties are split 50-50 and Vice President Kamala Harris holds the deciding vote.

McConnell previously warned Democrats that GOP lawmakers would not support the semiconductor bill if they continued to work on a reconciliation package. Talks between Schumer and Manchin on such a package had appeared to break down weeks earlier – but just hours after the Senate voted to pass the Chips and Science Act, Democrats revealed that they had made a deal.

Republicans reacted angrily, and the House Minority Whip’s office asked GOP members in a late-night memo to oppose the chip bill in the vote on Thursday. “They lied about reconciliation,” House Minority Leader Kevin McCarthy, R-California, said on the morning of the vote.

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Democrats, meanwhile, celebrated the passage of the bill. “Now he goes to the White House for the President’s signature and a better future for our country,” House Speaker Nancy Pelosi, D-California, said during a ceremony at the Capitol on Friday morning.

Proponents say it is vital for the United States to increase its production of semiconductors, which are increasingly critical components in a wide range of products, including consumer electronics, automobiles, health equipment and weapon systems.

Biden also blamed chip shortages for skyrocketing inflation that has hampered his presidency. The lack of chips available for manufacturing new cars has been linked to soaring prices for used cars, which are pushing inflation higher.

Fleas have been rare during the Covid-19 pandemic. Factory shutdowns early in the outbreak sidelined chip production in Asia, while consumer demand for automobiles and improved home electronics that need the chips increased during the shutdowns. The United States’ share of global chip production has also fallen sharply in recent decades, while China and other countries have invested heavily in the industry.

The United States makes few of the more advanced types of semiconductors, which are largely produced in Taiwan. Pelosi and a delegation of five House Democrats visited the island, a source of significant tensions with China, earlier Tuesday as part of an Asian tour.

The speaker said the trip was aimed at reaffirming US ties with regional allies, including Singapore, Malaysia, South Korea and Japan. But China, which asserts its control over Taiwan, has deployed increasingly belligerent rhetoric towards the United States in response to the tour.

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