Biden signs bill to bolster US chip output

US PRESIDENT Joe Biden has this week signed into law a bill that will provide billions of dollars to bolster the country’s semiconductor production, including dedicated funding for microchips used by the automotive industry, Automotive News reports.

The bipartisan bill, known as the CHIPS and Science Act, provides more than $US52 billion ($A73.4b) in government subsidies for US semiconductor research, design and production. Of that, only $US2 billion ($A2.9b) is designated to produce mature node or ‘legacy chips’ used by the automotive industry.

Senators Gary Peters and Debbie Stabenow, who worked to secure the incentive fund for the automotive industry, said it was important that greater microprocessor supply is available to the US automotive industry as the transition to electric vehicles and an increased number of automated features and advanced safety technologies become commonplace.

“This problem only gets bigger as time goes on. The demand for chips is increasing every single year, dramatically. We have to get in front of this problem (and) we have to start building these facilities now,” said Mr Peters.

According to the Automotive News report, the CHIPS and Science Act also includes a 25 per cent tax credit for investment in semiconductor manufacturing through to 2026 and invests “billions of dollars” in science and technology innovation to “strengthen economic growth, job creation and national security.”

“America invented the semiconductor, and this law brings it back home. It is in our economic interest, and it’s in our national security interest, to do so,” said Mr Biden.

The bill is a scaled-down version of legislation previously passed by the US Senate and House to address the global semiconductor shortage and other supply chain disruptions effecting a range of industries reliant on semiconductor supply. That legislation also sought to improve US competitiveness with countries including China, Taiwan, South Korea and the European Union.

Funding for the CHIPS – Creating Helpful Incentives to Produce Semiconductors for America – Act was included in the US Innovation and Competition Act that was passed by the US Senate in June 2021 and in the House’s version that was passed this February.

But the CHIPS and Science bill has not received a universally warm welcome. Critics including Senator Bernie Sanders called the Act a “blank cheque to the microchip industry” while Senator Pat Toomey referred to the bill as a “corporate welfare handout”.

Mr Biden pushed back against the claims saying: “This law is not handing out blank cheques to companies. Today, I am ordering my administration to be laser-focused on the guardrails that will protect taxpayers’ dollars.”

The US automotive industry, which has repeatedly called for government intervention to address the ongoing global semiconductor shortage that began in 2020, welcomed the move made by President Biden and says it looks forward to maximising opportunities the bill presents moving forward.

“Other countries are taking aggressive steps to get ahead of the United States on semiconductor production,” said Alliance for Automotive Innovation CEO John Bozzella.

“By investing in American-made chips today, our country will be in greater control of its own destiny tomorrow – not to mention less reliant on foreign suppliers and governments.”

It is estimated the microprocessor shortage prevented 1.5 million vehicles from being produced in the United States last year alone, leaving dealers with “lower than normal stock levels”, Mr Bozzella said.

Autos Drive America, which represents the US operations of international car manufacturers such as Toyota and Volkswagen, said the newly signed law will “bolster the US economy against supply chain disruptions.”

“We look forward to working with the US Department of Commerce to ensure the legislation is implemented to maximise opportunities for international automakers to boost production across the country and create even more careers in modern manufacturing,” ADA CEO Jennifer Safavian told Automotive News.