The U.S. Senate has fast-tracked a vote to bring to the Senate floor deliberation and final approval of the $62B in subsidies for the already Senate-approved bill known as the CHIPS Act. The separate vote today on the CHIPS act appropriations will also include a vote on the Fabs Act:
“A draft [of the CHIPS Act] being circulated in Congress on Monday also included elements of a separate bill, known as the Fabs Act, which offers tax credits to build chipmaking plants, and $1.5bn for funding 5G networks,” (1) including “a 25% tax credit for the construction of fabs and the manufacturing equipment necessary to operate the facilities.” (2)
The CHIPS Act and FABS ACT legislation has now been fast-tracked and taken out of the United States Innovation and Competition Act of 2021, which is now stalled in the Senate. This omnibus bill “addresses U.S. technology and communications, foreign relations and national security, domestic manufacturing, education, trade, and other matters.” (3) The CHIPS Act provision in the bill would have provided “funding for FY2022-FY2026 to support U.S. semiconductor manufacturing, research and development, and supply chain security” and was part of these broader provisions of the United States Innovation and Competition Act of 2021:
- provides funding for wireless supply chain innovation;
- establishes a Directorate for Technology and Innovation in the National Science Foundation;
- extends through 2025 the authority of the National Aeronautics and Space Administration (NASA) to lease its non-excess real property and related personal property;
- authorizes various programs and policies related to space exploration;
- authorizes various international affairs programs and activities, including foreign assistance for the Indo-Pacific region;
- requires federal infrastructure programs to provide for the use of materials produced in the United States;
- imposes sanctions on China for cybersecurity and human rights abuses;
- requires the Department of Health and Human Services to consider national security risks associated with sensitive genetic information;
- includes initiatives related to elementary and secondary education, including those to increase computer science education;
- contains provisions related to higher education, including those reauthorizing through FY2027 international education programs and addressing China’s influence on institutions of higher education;
- modifies and expands the schedule for graduated merger filing fees;
- prohibits federal funding for the Wuhan Institute of Virology;
- requires the U.S. Trade Representative to take certain actions related to digital trade and censorship practices; and
- extends through 2027 the Generalized System of Preferences. (3)
The vote today takes place with the backdrop of Taiwan’s GlobalWafers’ recently announced plan to build $5 Billion Plant in Sherman, Texas and our ongoing OODA Loop research and analysis based on the insights garnered from our November 2021 Stratigame on the Global Computer Chip Supply Chain Disruption, including:
December 2021: Commerce Secretary Raimondo in December 2021 urging the Passage of CHIPS Act, as well as praising Samsung’s commitment to a $17B Fab for stateside semiconductor manufacturing.
January 2022: Intel Reveals Plans for Massive New Ohio Factory, Fighting the Chip Shortage Stateside
Intel, Samsung, and GlobalWafers’ commitments to domestic U.S. Fabs all ruarywould have been severely impacted if the CHIPS Act subsidies remained delayed and languished as part of the larger bill until after the summer recess. Thus the reason for the urgent vote today.
February 2022: A Warning for the U.S. Chip Industry: Russian Retaliation Could Hit Supply of Key Materials, with a breakdown of the Russian and Ukraine-source material critical to the semiconductor manufacturing process.
March 2022: We extended our tracking of minerals for semiconductor production to the annual Unites States Geological Survey (USGS) 2022 List of Critical Minerals, which includes minerals like Palladium, C4F6, Helium, and Scandium – all of which are used in semiconductor production and or the manufacturing of sensors and memory.
April 2022: We provided a general update on the global chip supply chain disruption in the context of more esoteric updates like:
- Fake chips as a growing threat to national security and critical systems;
- Neon output for chips cut in half since Russia’s attack on Ukraine; and
- Design concerns shifting towards component sourcing (brought on by component shortages which have created a concern for long-term sourcing, even for prototypes).
May 2022: The Ukraine war and securing our semiconductor supply chains were also of concern in this timeframe. We also widened the lens further to garner broad industry insights from the annual Semiconductor Industry Association’s (SIA) 2021 State of the U.S. Semiconductor Industry and SIA 2022 Factbook. At that time, the SIA recommended invest in U.S. semiconductor leadership:
- Fund the domestic semiconductor manufacturing, research, and design provisions in the CHIPS for America Act.
- Enact an investment tax credit encompassing both manufacturing and design to spur the construction of new onshore advanced semiconductor research, design, and manufacturing facilities and to promote domestic chip innovation.
It seems Senate leadership has heeded the SIA recommendations.
June 2022: Global exports of semiconductors to Russia have plummeted by 90% since the United States and allies slapped export controls on Moscow over its invasion of Ukraine, according to U.S. Commerce Secretary Gina Raimondo.
What Next?
The Senate is in recess until 2:15 PM EST. To track today’s vote, a live feed of the Senate Floor is found here.
Or track Senate floor Twitter updates at: @SenateFloor
The final approval of the legislation could come as early as next week. The ultimate goal is the passage of the legislation into law in an expedited fashion before the Summer recess (which begins August 8th).
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