Semiconductor Legislation Heads to President’s Desk

August 1, 2021

Congress last week approved bipartisan legislation, called the CHIPS and Science Act, designed to decrease U.S. reliance on Chinese-manufactured semiconductors, support science and technology research, address supply chain and national security concerns, and keep American industries competitive with foreign firms. The $280 billion “Creating Helpful Incentives to Produce Semiconductors” or CHIPS legislation will provide “semiconductor companies $52.7 billion to encourage them to develop and research semiconductors and chips in the U.S., reports The Wall Street Journal. This includes:

  • $39 billion in financial assistance to build, expand, or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packaging, or research and development.

  • $11 billion for Department of Commerce research and development.

  • $1.5 billion for ‘leap-ahead’ technologies in the U.S. mobile broadband market.

The bill also creates a 25% investment tax credit for companies that invest in semiconductor manufacturing.

Republicans had threatened to block the CHIPS bill if Democrats did not agree to abandon their bigger budget reconciliation plans. On July 27, the Senate voted 64-33 (including 17 Republicans) to pass the CHIPS legislation. A few hours later (and the night before the House vote), Senate Democrats announced a Schumer-Manchin reconciliation agreement. The next morning, the House voted 243-187 (including 24 Republicans), after House Republican Leader Kevin McCarthy opted to whip against the CHIPS manufacturing bill that Senate Republican Leader Mitch McConnell had supported one day earlier, opening a curious rift among Republicans in Congress.

The legislation underwent at least five renaming and countless major revisions before it passed.


Justin Ailes
Managing Director, Government Relations

The bill also creates a 25% investment tax credit for companies that invest in semiconductor manufacturing.
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