Senate strikes deal on $52 billion for chips in China competitiveness bill

Washington — A bill that would put $52 billion toward semiconductor chip manufacturing in the United States and strengthen “Buy American” rules advanced in the Senate Thursday.

Nearly derailed by a last-minute disagreement over trade policy, it’s one of the few major pieces of Democrat-led legislation that’s expected to get significant Republican support in Congress this year. The Senate voted 68-30 to end debate on the bill Thursday afternoon, moving it closer to a final vote.

Hundreds of Ford trucks fill a parking lot off I-96 in Detroit, April 25, 2021. A global semiconductor shortage has forced car manufacturers to stockpile unfinished vehicles.

The bill, dubbed the “U.S. Innovation and Competition Act,” would boost domestic manufacturing of the chips that power electronics and key parts of modern cars, trucks and SUVs, such as power steering and infotainment displays. A chip shortage sparked by the coronavirus pandemic has forced plant shutdowns for automakers nationwide and is expected to cost the industry around $110 billion in lost revenue globally. 

It would also authorize funding for research and development of emerging technology, energy-related supply chains and NASA’s human landing systems program.

The $250 billion bill is aimed at increasing the United States’ economic competitiveness with China, which has been the source of bipartisan concern over intellectual property rights, human rights abuses and, in the auto industry, dominance in the emerging electric vehicle market.

“The focus of the legislation is straightforward: It’s about making sure that America continues to be the leader in innovation, the leader in manufacturing, and power our economy in ways that are necessary for us to compete with our global competitors, particularly the Chinese government,” said Sen. Gary Peters, D-Bloomfield Township.

The package includes $50 billion for semiconductor chips and an additional $2 billion specifically for “legacy” chips expected to help automakers, which Peters and  Sen. Debbie Stabenow, D-Lansing, lobbied their colleagues to include.