U.S. Congress Poised To Pass Long-awaited Bill To Boost Chipmakers, Compete With China

The U.S. House of Representatives is set to pass sweeping legislation on Thursday to subsidize the domestic semiconductor industry as it competes with Chinese and other foreign manufacturers, despite a late decision by some Republicans to pull their support.

The Senate passed the "Chips and Science" act with bipartisan support on Wednesday, after more than a year of effort. A rare major foray into U.S. industrial policy, the bill provides about $52 billion in government subsidies for U.S. semiconductor production and an investment tax credit for chip plants estimated to be worth $24 billion.

The legislation would also authorize $200 billion over 10 years to boost U.S. scientific research to better compete with China. Congress would still need to pass separate appropriations legislation to fund those investments.

Approval by the Democratic-controlled house, expected later on Thursday, would send the measure to the White House, where Democratic President Joe Biden has said he will sign it into law.

Lawmakers said they normally would not support hefty subsidies for private businesses but noted that China and the European Union have been awarding billions in incentives. They also cited national security risks and huge global supply chain problems that have hampered production of products from cars to weapons to video games.

The bill had been expected to easily pass the House with support from both Democrats and Republicans. Competition with China is one of the few policy areas of agreement between the deeply divided parties.

However, Republican party leaders told members to vote against the bill after the announcement on Wednesday of an agreement between Senate Democratic leader Chuck Schumer and Democratic Senator Joe Manchin that could pave the way for Senate passage of other legislation to increase corporate taxes, reduce the national debt, invest in energy technologies and lower the cost of prescription drugs.