Congress passes $280bn Chips and Science Act

Congress has passed the $280bn Chips and Science Act, handing US president Joe Biden an eleventh-hour legislative victory before the upcoming midterm elections.

Members of the House voted 243-187 on Thursday to send the bill to the president, who is expected to sign it into law in the coming days.

The chips legislation will provide $52bn in subsidies for US chip manufacturers and more than $100bn in technology and sciences investments, including the creation of regional innovation hubs and expanding the work of the National Science Foundation.

The bill, which aims to make the US more competitive with China, has garnered support from across the political aisle and passed the Senate on Wednesday in a bipartisan 64-33 vote.

However, it faced a tougher fight in the House amid Republican anger because of the tax-and-spend deal agreed by senator Joe Manchin, a Democrat, and Chuck Schumer, the Democratic leader in the Senate.

The Chips bill ultimately won support from some Republicans and progressive Democrats, some of whom have spoken out against subsidies for profitable semiconductor makers. Democrats have a thin 220-211 majority in the lower chamber of Congress.

In a statement on Wednesday, Biden praised the Chips and Science Act, saying it would lower “prices on everything from cars to dishwashers”. He said the legislation would also create new jobs and ensure “more resilient American supply chains, so we are never so reliant on foreign countries for the critical technologies”.

Just weeks ago the Chips act looked in danger of stalling after Mitch McConnell, the Senate’s top Republican, threatened to block it, setting off a frantic round of lobbying from the bill’s supporters in the industry and in Congress. Intel chief executive Pat Gelsinger warned he would have to delay investment in the company’s planned $20bn plant in Ohio if the money was not approved. He urged chief executives in the automotive and medical device industries to also speak out.

Washington has been concerned about US reliance on microchips made in Taiwan for years, but the unease has been exacerbated over the past 12 months by China’s increasingly aggressive behaviour around the island.

Sanjay Mehrotra, the chief executive of Micron, has also been a prominent supporter of the bill. He told the Financial Times his company was about to make a decision to build a fabrication plant “for the 2025-26 timeframe”, and needed to know if there would be subsidies available. “This is an urgent matter, we are at a crossroads.”

The industry has pointed out that many other countries subsidise chipmaking or are planning to do so. Germany, for example, has announced it will fund 32 semiconductor projects using a €10bn fund it announced in May. Japan has approved $6.8bn in funding for domestic semiconductor investment.

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