Calling it a “once-in-a-generation investment in America itself,” President Joe Biden on Tuesday signed a $280 billion legislative package into law that aims to boost semiconductor manufacturing and scientific research in the U.S.
Intended to make the U.S. more competitive with China in key technologies, the legislation includes roughly $52 billion for computer chip manufacturers to spur domestic production. About $39 billion will be used to directly subsidize the construction and expansion of U.S. semiconductor factories, while $11 billion is for research into new technologies, as well as workforce development. And $1.5 billion will be made available through the Public Wireless Supply Chain Innovation Fund, with the goal of helping U.S. telecommunications companies compete with Chinese firms, most notably the telecom giant Huawei.
“We need to make these chips here in America to bring down everyday costs and create jobs,” Biden said at the signing ceremony at the White House. “Unfortunately, we produce zero percent of these advanced chips and China is trying to move way ahead of us to manufacture these sophisticated chips as well. … The United States must lead the world in the production of these advanced chips; this law will do exactly that.”
The bill also includes an $82.5 billion increase in funding for scientific research and development, to be funneled over five years through the National Science Foundation and the Department of Energy's Office of Science. About $13 billion of that will target STEM (science, technology, engineering and math) education through scholarships and fellowships.
A turn toward industrial policy: The bill marks a departure for many lawmakers who have opposed direct federal subsidies for manufacturers, no matter what the product.
“The bipartisan support illustrated how commercial and military competition with Beijing — as well as the promise of thousands of new American jobs — has dramatically shifted longstanding party orthodoxies, generating agreement among Republicans who once had eschewed government intervention in the markets and Democrats who had resisted showering big companies with federal largess,” The New York Times’ Catie Edmondson wrote when the Senate passed the bill in July.
A large portion of the subsidy money is expected to go to a handful of major manufacturers, including Intel, Taiwan Semiconductor Manufacturing and South Korea’s Samsung Electronics, all of which are building new facilities in the U.S., including a $20 billion plant in Ohio for Intel. Earlier Tuesday, Micron Technology announced that it will invest $40 billion in domestic memory-chip manufacturing, which the company said could create as many as 40,000 new jobs.
Micron CEO Sanjay Mehrotra, who attended the bill signing along with other industry leaders, pointed out that less than 2% of memory chips are currently produced in the U.S. “With Micron’s commitment, it will enable us to produce one in 10 chips of the global memory consumption here in the U.S.,” he said.
As the White House noted Tuesday, Qualcomm and GlobalFoundries have announced a new partnership that will involve a more than $4 billion investment in chip manufacturing in New York state. Qualcomm said it plans to increase its U.S. chip production by 50% over the next five years.