logologologologo
  • Home
  • Business
  • Markets
  • Exchange
  • Investment
  • Personal Finance

Chips bill advances to Biden’s desk — Here’s what’s in the soon-to-be law

After more than a year of negotiations, Congress has passed a bill to alleviate the chip shortage and shore up U.S. competitiveness with China — in part by giving $50 billion to the semiconductor industry.

The House voted 243-187 on last Thursday to send the “CHIPS+” bill to Biden’s desk where he has promised to sign it. It cleared the Senate last Wednesday in a vote of 64-33.

Thursday’s final vote proved a bit closer than expected with some Republicans who had supported the effort voting no at the last minute to protest the expanded reconciliation bill announced last night by Democrats. Nevertheless, 24 Republicans voted for the package, and the bill passed relatively easily. One Democrat, Sara Jacobs of California, voted present Thursday with every other member of her party voting yes.

Senate Majority Leader Chuck Schumer (D-NY) recently said the effort will help “one of the most important struggles of this century.”

“The 21st century will be won or lost on the battleground of technological innovation,” he added.

The cost of the bill is still being tabulated. A preliminary analysis from the Congressional Budget Office assesses the bill will incur roughly $79 billion in new spending over the coming decade. The bill will also redirect existing government money to the effort; a fuller accounting is expected to be released soon but it likely to be much higher and spend a total of about $280 billion.

Lawmakers had previously passed a more ambitious version of the bill, and for a time legislators discussed a “slimmed down” version that would only include the direct inducements to the semiconductor industry. But in the end, lawmakers added a host of provisions back into the bill, ballooning the cost.

Here are the highlights from in the bill, which Senator Mark Kelly (D-AZ) recently told “affects the costs for so many things for Americans” from your cellphone, to your vacuum cleaner, to the government weapon’s systems.

‘America invented the semiconductor’

This week’s votes came after a full court press from the Biden administration to restart the effort after months of fruitless negotiations.

“America invented the semiconductor — it’s time we bring it home,” President Joe Biden said at a virtual White House event on last Monday.

Meanwhile, Commerce Secretary Gina Raimondo addressed criticism of the bill by stressing that it doesn’t aim to make businesses more profitable but instead seeks to invest in the U.S. economy.

From the private sector, a host of companies descended on Washington to push the bill over the finish line. Gary Cohn, the former Director of the National Economic Council and a current vice-chairman of IBM (IBM), said his company alone was bringing over 60 executives to meet with lawmakers.

The key provision in the bill is the $50 billion for chipmakers. Of those funds, $39 billion are earmarked to “build, expand, or modernize domestic facilities” for chip-making.

The remainder — $11 billion — is set aside for research and development. This money appears designed to alleviate a rift that had been developing between semiconductor companies like Advanced Micro Devices (AMD), Qualcomm (QCOM) and Nvidia (NVDA), which had focused on designing — but not manufacturing — these crucial chips and were worried about being left out.

In any case, Intel (INTC) will be a key recipient of the funds. The company recently postponed the groundbreaking on an Ohio factory because of delays with the bill but promised to move ahead if it becomes law.

Other companies that appear likely to receive funds include Texas Instruments (TXN), Micron Technology (MU), Global Foundries (GFS), and Samsung.

A new investment tax credit

Elsewhere in the bill, another $4.2 billion will help fund other areas of the industry like workforce training, defense initiatives, future innovation, and for the U.S. mobile broadband market. The money for broadband focuses on “leap-ahead technologies,” including an effort to promote non-Chinese 5G equipment manufacturing.

Another portion is a new “Advanced Manufacturing Investment Credit,” which creates a new 25% tax benefit for semiconductor manufacturing. It’s part of a suite of efforts that, advocates say, will allow the U.S. to catch up in the global semiconductor manufacturing race.

The U.S. role in semiconductor manufacturing has fallen from nearly 40% in 1990 to 12% today, according to a recent report from the Semiconductor Industry Association. The situation is even worse with the world’s most advanced logic semiconductors, 100% of which were manufactured overseas in 2019. The group has applauded progress on the bill.

Daniel Clifton, head of Washington research at Strategas, told recently that many view semiconductors as “the new oil.” If a nation can “control oil and chips, you start to control the production of just about anything that’s going to happen in the economy and we could see that that’s where the long-term trend is,” he said.

Other ‘guardrails’ aimed at China

The bill is also set to restrict semiconductor companies’ activities, banning new work “in specific countries that present a national security threat to the United States.” The language is clearly aimed at China, which has been moving to bolster its semiconductor industry, as well.

The provision is designed to ensure that China doesn’t receive any benefits from the new U.S. government funds. “We’re not going to have to worry so much about the actions of an adversary, meaning China, when it comes to our supply of semiconductor chips,” Sen. Kelly said.

On Monday, Biden also noted that the guardrails mean “we’re not going to allow these companies to use these funds to buy back stock or issue dividends.”

The bill also includes billions to beef up science training efforts to help the U.S. compete against China. In total, the National Science Foundation, the Department of Commerce, and the National Institute of Standards and Technology will divvy up $52 billion in funding increases over the coming years for initiatives aimed at shoring up U.S. competitiveness in areas like building a “STEM workforce”

The bipartisan effort has engendered opposition from a swath of Republicans but also one of Biden’s own allies. Sen Bernie Sanders (I-VT) called the bill a blank check “at a time when semiconductor companies are making tens of billions of dollars in profits and paying their executives exorbitant compensation packages.”

He also savaged the “guardrails” in the package, noting that companies would still be able to outsource some jobs abroad and also use their profits to make stock buybacks if they want.

Some conservative House Republicans also tried to stop the bill, calling it a “fake” China bill. However, the bill ended up passing with relative ease after the long delay.

Many advocates immediately hailed the news. IBM Chairman and CEO Arvind Krishna hailed the House passage as marking” a historic investment in our economy here at home, boosts our global competitiveness, and strengthens our national security.”

Related posts

March 29, 2023

Memory chipmaker Micron expects revenue drop, expects AI to boost sales in 2025


Read more

Categories

  • Business
  • Car
  • Content
  • Crypto
  • Economy
  • Exchange
  • Inflation
  • Investment
  • Markets
  • Personal Finance
  • Technology
  • Uncategorized

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021

Recent Posts

  • Memory chipmaker Micron expects revenue drop, expects AI to boost sales in 2025
  • Apple launches ‘Apple Pay Later’ buy-now, pay-later program
  • US regulator goes after Binance in newest crypto clash
  • A bank crisis brings an old favorite back for traders: Morning Brief
  • SVB hearing, consumer confidence, quarter end: What to know this week

About Us

The Alpha Cut a Vida Street LLC Company
1404 N. Ronald Reagan Blvd.
Suite 1120
Longwood, FL 32750

Link

(843) 256-4375
https://thealphacut.com

Why Us

Terms & Privacy
Policy & Procedure
Disclaimer

This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only.
Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
All data in this communication is provided for informational purposes only and is not intended for trading or investing purposes. We expressly disclaim the accuracy, adequacy, or completeness of any data and content provided by financial exchanges, individual issuers, their respective affiliates and business partners and shall not be liable for any errors, omissions or other defects in, delays or interruptions in such data, or for any actions taken in reliance thereon. You agree not to copy, modify, reformat, download, store, reproduce, reprocess, transmit or redistribute any data or information found herein or use any such data or information in a commercial enterprise without obtaining our prior written consent.
We make no express or implied warranties or representations and shall have no liability whatsoever with respect to any data contained herein. The data may not be further redistributed or used to create indices or other financial products. This report and the views expressed herein are subject to change at any time based upon market or other conditions (such as domestic and global economic trends) and are current as of the date of publication hereof. The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity.
We emphasize that Investment in the securities of smaller companies can involve greater risk than is generally associated with investment in larger, more established companies, and can result in significant capital losses that may have a detrimental effect on the value of your investments.
Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.
Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth.As with any structuring of a portfolio of investments, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
The information, analysis and opinions expressed herein are for general, impersonal information only and are not intended to provide specific advice or recommendations for any individual entity.

copyright © Alpha Cut 2021. All Right Reserved
The Alpha Cut a Vida Street LLC Company