President Biden on Monday signed into law the CHIPS and Science Act, a massive $280 billion piece of legislation that is meant to help the US counter China.
The bill includes nearly $53 billion in funds to subsidize the domestic production of semiconductors, $24 billion for tax incentives, and over $200 billion in research funding that will go to federal agencies.
At a signing ceremony, Biden said the bill would help the US compete with China in the chip industry. “China is trying to move way ahead of us to manufacture these sophisticated chips as well,” he said. “The United States must lead the world the production of these advanced chips. This law will do exactly that.”
Opponents of the bill have likened it to corporate welfare. Congress and the Biden administration worked closely with corporations when the legislation was making its way through the House and Senate. Some US chip makers have already announced that they will be building facilities with funds from the bill.
US arms makers were also eager to see the legislation become law as semiconductors are crucial for building advanced weapons. Biden and Deputy Defense Secretary Kathleen Hicks met with the CEO of Lockheed Martin to discuss the bill before it was passed through Congress.
Last week, House Speaker Nancy Pelosi (D-CA) met with chip industry leaders in Taiwan, including the chairman of Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest semiconductor manufacturer. Pelosi discussed the Chips and Science Act with the TSMC char, signaling the US might be trying to entice Taiwanese companies to open more facilities in the US with the new funds.
Part of the US strategy against China’s chip industry includes sanctions, but that has appeared to backfire. Bloomberg recently reported that US sanctions have supercharged China’s semiconductor industry and that it is now home to the fastest-growing chip makers in the world.