Senate passes $ 250 billion tech bill to boost US competition with China

Senate passes $ 250 billion tech bill to boost US competition with China

Employees work on the silicon wafer production line at a workshop of Jiejie Semiconductor Co., Ltd. on March 17, 2021 in Nantong, China’s Jiangsu Province.

Xu Congjun | China Visual Group | Getty Images

The Senate passed one of the most important industrial bills in U.S. history on Tuesday in a bipartisan effort to ensure the United States remains competitive with China as one of the technological powers. global.

The bill, which passed House 68-32, commits about $ 250 billion in funding for scientific research, grants for chip and robot makers, and a revamp of the National Science Foundation.

The scope of the bill, the end product of at least six Senate committees and nearly every member of the chamber, reflects the myriad of fronts in the US-China rivalry.

It also likely represents one of the last big bipartisan initiatives of 2021, proof that U.S. lawmakers are broadly in favor of legislation that opposes Beijing’s economic and military expansion.

Failure to expand domestic semiconductor production or redirect rare earth supply chains, proponents say, could leave the United States at a strategic disadvantage in the years to come.

The bulk of US innovation and competition law is a proposal previously known as the “Endless Frontier,” drafted by Senate Majority Leader Chuck Schumer, DN.Y., and Senator Todd Young, R-Ind.

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Endless Frontier reorganizes the National Science Foundation, allocates $ 81 billion to the NSF between fiscal years 2022 and 2026, and creates a Directorate of Technology and Innovation.

“Passing this bill – now called the US Innovation and Competition Act – is the time when the Senate lays the groundwork for another century of American leadership,” Schumer said Tuesday evening from the Senate.

“Authoritarian governments around the world believe that quarrelsome democracies like ours cannot unite around national priorities,” he added. “Well, let me tell you something: I believe they are wrong. I believe that this legislation will allow the United States to innovate, to produce and to compete with the world in the industries of the future. “

The bill would also fund a subsidy program run by the Commerce Department that would match financial incentives offered by states and local governments to chipmakers who upgrade or build new factories.

Specifically, the bill provides $ 52 billion to fund semiconductor research, design and manufacturing initiatives. The Semiconductor Industry Association, a trade group that represents part of the nation’s chipmakers, was quick to applaud the Senate’s effort.

“The Senate adoption of the USICA is a critical step toward strengthening semiconductor production and innovation in the United States and an indication of the strong bipartisan support in Washington to ensure sustained U.S. leadership in the United States. science and technology, ”said John Neuffer, CEO of SIA. “Enactment of these investments would help strengthen the US economy, national security, technological leadership, and global competitiveness for years to come.”

Mirroring the vote count, praise for the bill’s passage through the Senate came from both sides of the political aisle. Senator Ben Sasse, R-Neb., Specifically applauded the clear objectives of the legislation and added that he would have preferred an even sharper bill.

“As a Chinese hawk and fiscal hawk, I would have liked this bill to take a more focused and aggressive approach to the Chinese threat – but it is a good start,” he said in a statement. hurry. “The Chinese Communist Party is working overtime on cyber, AI and machine learning so that they can become the preeminent superpower in the world. We cannot let go.”

The bill’s success in the Senate also comes as the White House accelerates its own recommendations on how to secure U.S. supply chains that run through China and thwart Beijing’s geopolitical ambitions.

President Joe Biden applauded the passage of the bill on Tuesday evening, saying he was encouraged by the bipartisan effort.

“It is high time that we invested in American workers and American innovation,” Biden said in a statement. “We are in a competition to win the 21st century, and the start is ringing. As other countries continue to invest in their own research and development, we cannot risk falling behind.”

The White House announced on Friday that it extend restrictions on U.S. investments in some Chinese companies with suspected ties to the country’s military and surveillance efforts, adding more companies to a growing US blacklist.

Then, on Tuesday, the White House said it would dramatically examine the expansion of US production of lithium batteries, rare earth minerals and semiconductors.

USICA affirms its willingness to maintain a sustained focus on US-Chinese strategic competition through a bipartite and whole-of-government approach, leading to upcoming G7 and NATO summits where it is expected that the US will seek to work with their allies to present a united front towards China, ”wrote Mario Mancuso, head of the international trade and national security division of the Kirkland & Ellis law firm.

While debate over several amendments prevented the Senate from passing the legislation before the Memorial Day recess, the bipartisan passion for ensuring the United States remains competitive should bolster its cause in the House.

The chamber is expected to review the legislation in the coming weeks, but perhaps at a slower pace as representatives chop up various sections.

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