Senate advances bipartisan bill with billions for U.S. semiconductor production

WASHINGTON — The Senate on Tuesday voted to take up a measure providing significant incentives for domestic semiconductor chip production, viewed as key to luring major manufacturing facilities to Texas and other states.

The bipartisan 64-34 tally reflects a level of support that makes final passage of the bill likely before lawmakers leave for their August recess.

Backers say that, if Congress fails to pass the tens of billions of dollars in direct subsidies and tax breaks, multinational companies will abandon potential investments in the United States and locate their new facilities instead in Asia or Europe where countries have been willing to throw big money on the table.

“They’re going to pull their investments from new or expanded foundries in the United States and take them overseas,” Sen. John Cornyn, R-Texas, warned on the Senate floor Tuesday ahead of the vote. “This isn’t just a Chicken Little claim. Companies have put out the warning call, and I believe them.”

He cited the case of GlobalWafers, which is planning a new silicon wafer facility in Sherman that would create up to 1,500 new jobs and produce 1.2 million wafers per month.

Silicon wafers are a key component in making the semiconductor chips that power a wide variety of products, including common household products such as vacuum cleaners and military hardware such as fighter jets.

Cornyn quoted Commerce Secretary Gina Raimondo who has said the GlobalWafers CEO told her the new Sherman facility would be abandoned if Congress fails to pass what is commonly referred to as the CHIPS funding.

The bill’s detractors reflect a range of ideological diversity.

From the right, libertarian-minded opponents see the proposal as reckless industrial planning and inappropriate government meddling in the private sector.

They argue the government would be better off focusing on easing regulations and taking other steps to make locating facilities in the U.S. more attractive.

From the left, Sen. Bernie Sanders, I-Vt., delivered a floor speech Tuesday denouncing the bill as a “corporate welfare check” being handed to companies that already are making massive profits.

Sanders pointed to recent comments by Intel CEO Pat Gelsinger, who said that lawmakers shouldn’t leave for August recess without passing the CHIPS funding because his company and others in the industry might decide to build their new facilities overseas.

“I am thankfully not a lawyer, but that sure sounds like extortion to me,” Sanders said.

He estimated the cost of the subsidies and tax breaks at $76 billion, money he views as better used to address health care access, homelessness or other priorities.

Sanders said the money should come with strings attached so taxpayers see a return on their investment. He plans to push for conditions on the funding such as requirements that companies who take the money not buy back their own stock or cancel labor agreements.

Other members have objected to how the bill came together.

Sen. Ted Cruz, R-Texas, for example, has previously supported certain parts of the proposal but voted against advancing it on Tuesday.

Cornyn had joined Sen. Todd Young, R-Ind., in pushing for the legislation, and both could be seen eagerly counting up the Republican “yes” votes on the Senate floor Tuesday evening.

The U.S. share of chip production has fallen from 37% to about 12% in large part because other countries have thrown financial incentives at companies to lure them away.

There is broad agreement that decline poses a threat to the country’s economic and national security.

Cornyn said on the floor that producing goods overseas at lower costs can be good in some circumstances for consumers.

“But when you’re talking about a sole source for the most advanced semiconductors, that goes from being a convenience to a nightmare,” Cornyn said. “And of course during the pandemic, we’ve experienced a number of supply chain vulnerabilities and now, as the economy around the world continues to expand, anybody who has tried to buy a car, a dishwasher or a computer over the last couple of years has likely been impacted with higher costs or long delays or both.”

Despite broad support for boosting domestic chip manufacturing, the measure had become entangled in partisan disputes over an unrelated push by Democrats to enact tax increases on high earners and corporations, climate-related provisions and prescription drug price restraints.

When Democrats revived talk of adopting those measures through the budget reconciliation process, Republican leaders balked at continuing discussions on the CHIPS funding.

But once Sen. Joe Manchin III, D-W. Va., announced he wouldn’t back the tax and climate proposals at this time, it opened up a path for the bill to move forward.

As Cornyn left the chamber Tuesday, he told reporters he hopes the number of supporters grows on final passage because some Republicans likely felt uncomfortable voting to proceed with a bill that hadn’t been finalized.

And he predicted the other chamber will accept what the Senate passes, based on communication between the administration and Democratic leaders.

“The House is going to pass it,” Cornyn said.