Senate Approves $280 Billion Bill to Boost U.S. Science, Chip Production

The bill was approved 64-33, with 17 Republicans joining Democrats to vote in favor.

Companies that could tap the funding for U.S. expansions include

Intel Corp.

,

Taiwan Semiconductor Manufacturing Co.

,

GlobalFoundries Inc.,

Micron Technology Inc.,

Applied Materials Inc.

and more.

A separate $11 billion program seeks to partner with industry to advance semiconductor manufacturing research and workforce training, while another $2 billion fund aims to more quickly translate laboratory advances into military and other applications. Lawmakers added $24 billion in tax credits for investments in semiconductor manufacturing.

The bill has been in the works for more than three years. Senate Majority Leader

Chuck Schumer

(D., N.Y.) first started discussing it in 2019 with Sen.

Todd Young

(R., Ind.) when the two were exercising in the Senate gym.

“In the 1970s and 80s our companies could do just fine on their own,” Mr. Schumer said in an interview this week. “But in the 21st century, with countries like China and Germany investing heavily, we could sit back on the sidelines and who would lose out? American workers, American economic dominance, and our national security.”

During debate on the Senate floor this week, the bill’s supporters said that while competition with China was a primary motivator, they were spurred on by the disruption in semiconductor supplies during the Covid-19 pandemic. Most semiconductors, ubiquitous in modern electronics, are made abroad, and companies in industries from medical products to missiles have urged lawmakers to shore up supplies for the long term. A pandemic-related boom in chip demand has helped cause bottlenecks, though it is showing signs of easing in some industries.

“That vulnerable supply chain, if disrupted, could cause not only a severe economic depression in America but also threaten our national security directly,” said Sen.

John Cornyn

(R., Texas).

Opponents of the bill pushed to attach more strings to the funding and questioned the wisdom of a large subsidy to a profitable industry. Sen.

Rick Scott

(R., Fla.) called the package “one of the grossest gifts to corporate America I’ve ever seen.”

Sen.

Bernie Sanders

(I., Vt.) accused Intel Chief Executive

Patrick Gelsinger

of extorting lawmakers, pointing to the executive’s assertion that his and other companies would likely invest in manufacturing facilities in Europe or Asia if the bill doesn’t pass this summer.

“I worry not only about this bill. I worry about the precedent,” Mr. Sanders said. “Any company who is prepared to go abroad, who has ignored the needs of the American people, will then say to the Congress, ‘Hey, if you want us to stay here, you better give us a handout.’”

Intel didn’t immediately respond to a request for comment. Mr. Gelsinger, in a recent op-ed he co-wrote with

Ford Motor Co.

CEO

Jim Farley

published in The Wall Street Journal,  said the legislation is necessary for the U.S. to “help level the playing field with global competitors.”

“Without intervention, shortages of chips—including the legacy chips widely used in the auto, medical-device and defense industries—are expected to persist as investment in the U.S. stalls,” Messrs. Gelsinger and Farley wrote.

Sen.

Sherrod Brown

(D., Ohio) joined Mr. Sanders in blaming the U.S.’s brittle semiconductor supply chain on the industry’s earlier decisions to move operations offshore. But Mr. Brown said he supports the bill because it promises jobs in his home state, where Intel is planning a chip-manufacturing facility.

“We’re on the verge of a big win for Ohio,” he said.

Many lawmakers also see hometown benefits in the bill’s second component, which authorizes nearly $170 billion for technology research and development across several federal agencies during the next five years.

Chunks of that funding are expected to flow to rural states under new formulas for distributing research dollars. The legislation also directs the Commerce Department to create 20 “regional technology hubs” designed to create more tech jobs across the country.

The technology R&D investments target fields including artificial intelligence, quantum computing, wireless communications and precision agriculture.

The National Science Foundation would oversee a new $20 billion directorate focused on accelerating the development of technologies critical to U.S. security, in addition to an increase to $61 billion for its core activities funding researchers at universities and elsewhere.

The Energy Department’s Office of Science‘s five-year authorization would increase to about $50 billion to boost a series of programs focused on clean energy, nuclear physics and high-intensity lasers.

The bill also sets new long-term policies for the National Aeronautics and Space Administration, instructing the space agency to prioritize the research required to bring Americans to Mars as well as programs such as Artemis Moon, which could put the first woman and person of color on the moon.

Write to Ryan Tracy at [email protected] and Natalie Andrews at [email protected]