$52B CHIPS Act Clears Senate Hurdle, Expected To Pass House Vote

Channel partners cheer $52 billion bill to bolster the U.S. semiconductor industry and wrest some supply chain control from global competitors.

The U.S. Senate on Tuesday passed a key vote clearing the way for the $52 billion CHIPS Act aimed at boosting the semiconductor manufacturing industry – a move channel partners say will be a much-needed boost for a beleaguered supply chain.

The initial vote to limit debate on the bill passed with bipartisan support with a vote of 64-32. The Senate is expected to pass the bill and it will then move to the House, where Speaker Nancy Pelosi (D-Calif.) has signaled it will have enough support to pass. The bill would earmark $52 billion in subsidies and offer an investment tax credit to encourage semiconductor companies to boost manufacturing in the U.S.

Intel is expected to be a major beneficiary of the bill with semiconductor manufacturing plants planned for Ohio and Arizona expected to cost more than $40 billion. The company is also planning to use $3.5 billion to boost packaging operations in New Mexico.

[RELATED STORY: INTEL FIGHTS BACK: CHIPS ACT WILL BENEFIT THE US SEMICONDUCTOR INDUSTRY]

Harry Zarek, president, founder and CEO of Richmond Hill, Ontario-based Compugen, lauded the effort as a win for the entire IT channel. “Support for the CHIPS Act is much more than improving our supply chain,” he said. “Improving deliveries is a given. There are additional benefits, including simplification of the supply chain by building a fully enabled ecosystem onshore for semiconductors and the enhanced manufacturing capacity it brings back.”

He added, “There are only winners in this strategic investment by the government.”

Mike Turicchi, vice president of Gainesville, Va.-based NCS Technologies, said the news couldn’t come at a better time and will be an equalizer within the channel. “This infusion of cash will be a catalyst of future tech manufacturing in the U.S.” he said. “This is something we desperately need. For the channel, it means better availability of the components we use to build our mission-specific solutions. Smaller companies like us fight for every component these days, often losing out to larger OEMs with greater influence.”

Even as some lawmakers grumble at the prospect of publicly funding corporate interests (Sen. Bernie Sanders called Intel’s delayed Ohio foundry groundbreaking an attempt at ‘extortion’), industry analysts say given the increased global importance of computer chips, the move is akin to funding other major public infrastructure projects.

U.S. Commerce Secretary Gina Raimondo took to CBS “Face the Nation” Sunday to push back on criticism coming from both sides of the political divide. “I fully dispute Senator Sanders’ characterization of this. It isn’t a blank check,” Raimondo said. “There are many strings attached… companies can’t use this money to build facilities in other countries.”

President Joe Biden met virtually with labor leaders and business executives Monday to urge lawmakers to support legislation boosting the domestic semiconductor industry. The meeting focused on the importance of passing the Chips Act to bolster America’s competitive edge, manufacturing power, and national security, according to a transcript of the session.

“We’re here today to talk about the importance of passing the CHIPS for America Act to strengthen our national and economic security,” Biden told the group.

Roger Kay, founder and analyst at technology market intelligence firm Endpoint Technologies Associates, said the U.S. semiconductor industry could use the boost and everyone would benefit. “The basic idea that we should increase manufacturing in the U.S. is good,” he said. “And Intel is the granddaddy for home turf processors being made here in the U.S. That’s our intellectual property, so you do want to promote those guys (the CHIPS Act) is no more than what China’s doing to help out their own silicon manufacturing sector.”

The House of Representatives is expected to take up the CHIPS Act for a final vote soon.

Thomas Grillo contributed to this report.