Senate passes $280 billion dollar legislation to boost U.S. chip production;

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The bill to boost scientific research and the U.S. semiconductor industry, sending the legislation on to the House.

The CHIPS and Science Act of 2022 dedicates public money to fostering a domestic semiconductor industry. A $39 billion fund would provide direct financial assistance for the construction and expansion of manufacturing facilities, among other purposes, according to a summary from the Senate Commerce Committee.

The package also includes more than $52 billion for U.S. companies producing computer chips, as well as tax credits to encourage investment in chip manufacturing. It also provides funding to spur the innovation and development of other U.S. technologies.

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.

But the chips have recently been in short supply, following sudden shifts in consumer demand related to the Covid-19 pandemic. And the U.S. share of global chip production has fallen precipitously in recent decades, while China and other nations have invested heavily in the industry.

The U.S. also makes little of the most advanced types of semiconductors, which are largely produced in Taiwan, the epicenter of rising political tensions with China.

Much modern warfare is powered by vast arrays of semiconductors — each Javelin missile launching system contains hundreds, for instance leading U.S. defense officials to worry about the nation’s reliance on foreign producers for its chip supply.

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.

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.

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