Senate Majority Leader Chuck Schumer is telling senators to expect an initial vote as early as Tuesday on scaled-back legislation that would provide grants, tax credits and other financial incentives for companies that build semiconductor manufacturing plants in the U.S.
Both the House and Senate have passed sweeping bills that included numerous trade provisions, additional dollars for research and called for the development of regional technology hubs across the country. But lawmakers have struggled to reach a final compromise that could generate 60 votes in the Senate, the number needed to overcome procedural hurdles.
Lacking a larger agreement, Schumer, D-N.Y., will move to take up a “limited competition bill” that includes the $52 billion in financial incentives and research that was at the heart of the bills passed in the House and the Senate. It would also include a semiconductor investment tax credit, and additional pieces could be added if they’re ready.
Schumer’s plans were described by a person familiar with the private deliberations who was granted anonymity to discuss them.
The Biden administration has ramped up its advocacy for the semi-conductor bill in recent days, calling it essential that lawmakers take action before the August recess.
Commerce Secretary Gina Raimondo and other administration officials met behind closed doors with senators on Wednesday to discuss the national security ramifications of relying on foreign countries for computer chip production. She held a similar briefing Thursday with House lawmakers. When asked if the administration would push Congress to support the scaled-back package that Schumer plans to put before the Senate next week, she said, “yes.”
“We want a robust bill. This is core to national security. Having said that, all options are on the table, because we’re out of time,” Raimondo said. “This is about: What can we get the votes for? We cannot wait, and if that’s what the members in the both the House and Senate feel is possible, well, let’s get it done.”
Raimondo said chipmakers are making decisions now about how to meet future demand. They are being offered lucrative incentives from other countries such as South Korea, Japan, France, Germany and Singapore to locate plants there. She cited Monday’s announcement by STMicroelectronics and GlobalFoundries to build a semiconductor factory in France as an example of other countries moving faster than the U.S. on the issue.
“If we don’t pass this, we’re going to wake up, other countries will have these investments, and we will say, ‘why didn’t we do this?’” Raimondo said.
Deputy Secretary of Defense Kathleen Hicks said she talked to lawmakers Thursday about the importance of a secure supply chain for national security. She noted that the Javelin missile systems the U.S. has provided to Ukraine relies on more than 200 semiconductor chips.
“Pretty much every major system that the Defense Department uses, just like most major components or systems you all use in daily life, rely on semiconductors and microelectronics,” Hicks said. “For the Defense Department, we want to make sure that supply is unfettered, that it doesn’t have a risk of being disrupted or denied in some way.”
The U.S. is increasingly reliant on foreign manufacturers for the semiconductors used in automobiles, smart phones, computers and other products. The U.S. share of global semiconductor production has fallen from 37% to 12% over the last 30 years. The pandemic has shown why that can be a problem as manufacturers scramble to get the chips they need to make their products.
It’s unclear if even the scaled-back measure could gain the Republican support needed to pass the Senate. Republican leader Mitch McConnell, R-Ky., has threatened to derail the semiconductor legislation if Democrats revive their stalled package of energy and economic initiatives and seek to pass them on a party-line basis. Some of the Republicans who voted for the earlier Senate bill have endorsed his approach.
Many Democrats will also be unhappy about leaving some of their priorities behind. House Majority Leader Steny Hoyer, D-Md., however, said at the end of the day, lawmakers must do “what is possible to do.”