Biden to sign bill to boost US chips and compete with China

US President Joe Biden, in isolation following his diagnosis of COVID-19, appears virtually during a meeting with business and labor leaders about the Chips Act – relating to domestic manufacturing of chips and semi -drivers in the United States – in an auditorium on the White House campus in Washington, U.S., July 25, 2022. REUTERS/Jonathan Ernst

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WASHINGTON, Aug 9 (Reuters) – President Joe Biden will sign a bill on Tuesday to provide $52.7 billion in subsidies for U.S. semiconductor production and research and boost efforts aimed at making the United States more competitive with China’s science and technology efforts.

The White House is touting investments made by chip companies, though it’s unclear when the U.S. Commerce Department will write rules for subsidy review and how long it will take to underwrite projects.

Chief executives from Micron, Intel, Lockheed Martin, HP (HPQ.N) and Advanced Micro Devices (AMD.O) will attend the signing, scheduled for 10 a.m. EDT, as will cabinet officials and auto industry and Labor leaders, including United Autoworkers President Ray Curry, the White House said.

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Also in attendance will be the governors of Pennsylvania and Illinois, the mayors of Detroit, Cleveland and Salt Lake City, as well as lawmakers.

The White House said passage of the bill spurred new investment in chips. He noted that Qualcomm (QCOM.O) on Monday agreed to buy an additional $4.2 billion worth of semiconductor chips from GlobalFoundries’ (GFS.O) New York facility, bringing its total commitment to 7, $4 billion in purchases through 2028. read more

The White House also said Micron was announcing a $40 billion investment in memory chip manufacturing, which would boost US market share from 2% to 10%.

The legislation aims to alleviate a persistent shortage that affects everything from cars and weapons to washing machines and video games. Thousands of cars and trucks remain parked in southeast Michigan awaiting microchips as the shortage continues to impact automakers.

A rare major foray into US industrial policy, the bill also includes a 25% investment tax credit for chip factories, estimated at $24 billion.

The legislation authorizes $200 billion over 10 years to boost American scientific research to better compete with China. Congress would still have to pass separate appropriations legislation to fund these investments.

China had lobbied against the semiconductor bill. The Chinese Embassy in Washington said China “strongly opposes it”, calling it a “cold war mentality”.

Many U.S. lawmakers said they wouldn’t normally support large subsidies to private companies, but noted that China and the European Union have given billions in incentives to their chip companies. They also cited national security risks and huge global supply chain issues that have hampered global manufacturing.

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Reporting by David Shepardson; Editing by Bradley Perrett

Our standards: The Thomson Reuters Trust Principles.

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