The US House of Representatives finally approved billions of dollars in new funding for the US semiconductor industry on Thursday which puts a key component of the US government’s effort to out-compete China in the chip-making industry.
The approval came just a day after the US senate cleared the bill on Wednesday with a bipartisan vote of 64-33. The House vote was 243 to 187, with 24 Republicans voting in favor and one Democrat voting “present”.
The legislation, known as the Chips and Science Act, will now go to US President Joe Biden’s desk to be signed into law.
“The Chips and Science Act is exactly what we need to be doing to grow our economy right now,” Biden said in a statement after the vote. “By making more semiconductors in the United States, this bill will increase domestic manufacturing and lower costs for families. And, it will strengthen our national security by making us less dependent on foreign sources of semiconductors.”
The bill includes over US$52 billion in funding for semiconductor manufacturing and research, and vital technology in everything ranging from military weapons to consumer goods all of which the Biden administration has singled out as an urgent priority in the US competition against China.
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The US Government also made it known that the global chip shortage has played a significant role in high inflation in the country. Referring to the importance of chip manufacturing, a senior Pentagon official called it “ground zero of our tech competition with China.”
The bill’s authors and the White House have also said that the funding includes guardrails to prevent companies from taking their federal money and using it to invest instead in countries like China, although some critics have warned that those protections may not go far enough to block corporations from doing it anyway.
The funding also includes some US$39 billion for semiconductor manufacturing in the United States and another US$11 billion for chip research and development.
There is another US$1.5 billion that will be set aside to shore up the global telecommunications supply chain and limit the scope of involvement globally of telecommunication companies with close ties to the Communist Party of China, one of which is Huawei.
This funding comes amid a recent report that Washington has been investigating possible spying activities by Huawei Technologies, one of China’s largest telecom provider, on US military installations on behalf of Beijing even though Huawei and the Chinese government continues to deny all of these allegations.
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The US government also ordered American telecom service providers to replace any equipment they are using made by Huawei or ZTE, another powerhouse telecom supplier from China.
American carriers said they are yet to receive enough financial aides from Washington to do this bidding.
American telecoms companies had already been ordered by the US government to “rip and replace” any equipment they are using made by Huawei or ZTE, another Chinese telecoms supplier, but carriers have said they still haven’t received enough money from Washington to do it.
The bill could also lead to potentially billions of dollars for hi-tech scientific research and education, two areas where Biden has said the US is lagging dangerously behind China.
Congress would have to pass separate legislation to fund those research and education programs.
Rep Michael McCaul an original sponsor of the bill and a top Republican on the House Foreign Affairs Committee wrote on Thursday that the competition with Beijing over semiconductors had become a new Sputnik moment for the US and that Washington had no choice but to respond.
“Imagine the global catastrophe that would ensue if we became dependent on China for these chips, which are found in advanced weapon systems, aircraft, and other critical defense industry applications,” he wrote in an op-ed published by Fox News. “We cannot allow this to happen.”
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