Biden signs CHIPS Act to boost US chipmakers, compete with China

The law, providing $52bn in subsidies to US semiconductor manufacturers, aims to reduce US dependence on Taiwan and South Korea for critical technologies.

U.S. President Joe Biden walks to deliver remarks and sign the CHIPS and Science Act of 2022, on the South Lawn of the White House in Washington, U.S.
US President Joe Biden signed the CHIPS and Science Act of 2022, which grants $200bn over 10 years to advance US scientific research in an effort to compete with China [Evelyn Hockstein/Reuters]

US President Joe Biden on Tuesday signed into law a bill providing $52.7bn in subsidies for US semiconductor manufacturers and research, in a landmark effort to boost United States competition with China’s scientific and technology initiatives.

“The future is going to be made in America,” Biden said at the White House signing, calling the law “a once-in-a-generation investment in America itself”.

The Biden administration had previously underscored that the legislation, now called the CHIPS and Science Act, is vital to national security, competing with China, and reducing US dependence on Taiwan and South Korea for critical technologies.

The US Department of Commerce has yet to establish guidelines for evaluating grant applications, and it is unclear when projects will be financed.

The signing was attended by chief executives of Micron, Intel, Lockheed Martin, HP and Advanced Micro Devices, as well as cabinet officials and car industry and union leaders, including United Auto Workers President Ray Curry, the White House said.

US semiconductor companies have begun announcing billions in investments. Qualcomm has committed to spending a total of $7.4bn on purchases between now and 2028 after agreeing to acquire an extra $4.2bn worth of semiconductor chips from GlobalFoundries’s New York manufacturing facility on Monday.

The US market share will increase from 2 percent to 10 percent as a result of Micron’s announcement of a $40bn investment in memory chip manufacture, according to the White House. On Tuesday, Micron said that its investments will generate up to 40,000 jobs in manufacturing and construction, and it anticipates receiving funds from the semiconductor bill.

A continuous chips scarcity has impacted everything from vehicles, guns, washing machines, and video games.  As the shortfall continues to affect car makers, thousands of cars and trucks are stalled in southeast Michigan while waiting for chips.

The law also provides a 25 percent investment tax credit for chip facilities, which is worth an estimated $24bn. To pay for those investments, Congress will still need to adopt separate appropriations legislation.


Important restrictions demanded by Republicans and China hawks are also included in the bill: Businesses receiving assistance must agree not to grow their manufacture of sophisticated semiconductors in China.

China has opposed the semiconductor law through lobbying. The Chinese embassy in Washington said China “firmly opposed” it, calling it reminiscent of a “Cold War mentality”.

Many US lawmakers have said that they usually would not support hefty subsidies for private businesses but also noted that China and the European Union had been awarding billions in incentives to their chip companies.

They also mentioned concerns about national security and significant issues with the global supply chain that have impeded global industry.

Source: Al Jazeera and news agencies