By Parimal M. Rohit and Richard Lawson | CoStar News | July 26, 2022 | 5:15 P.M.

Congress is moving forward on legislation designed to boost domestic manufacturing of semiconductors, an initiative that's seen as encouraging more companies to build or expand multibillion-dollar chipmaking plants in the United States. 

The Senate voted Tuesday to advance a long-delayed bill that would provide $52 billion in federal subsidies for domestic semiconductor research, design, and manufacturing through the CHIPS Act. It comes as the world is dealing with a shortage of semiconductor chips used in electronics such as automobiles, cellphones, computers and dishwashers. 

The Senate is expected to pass the final version of the legislation in the next day or two and then it would head to the House, where it is expected to pass before making its way to President Biden’s desk to be signed into law, said Dan Rosso, a spokesman for the Semiconductor Industry Association, in an email. The signing would mark more than a year of debate over different versions of the bipartisan legislation as some semiconductor companies are waiting to act. 

Intel Corp., a Fortune 500 company based in Santa Clara, California, canceled plans for the official groundbreaking of two chip plants outside Columbus, Ohio, last week in protest over slow congressional movement on the legislation. Intel plans to spend at least $20 billion on the plants in the largest private investment in Ohio's history, but that investment could climb to $100 billion if Congress passes the legislation. 

"Intel has been clear since its announcement that the speed of the initial phase of construction and the overall size and scope of their investment in Ohio are dependent on the CHIPS Act, which has strong support from Ohio's bipartisan congressional delegation,” JobsOhio, the state’s private economic development corporation, said in an emailed statement. “We are looking forward to the expedient passage of CHIPS Act funding to continue the momentum of this historic investment in Ohio." 

Pressure is also coming from Texas, where companies such as South Korea-based Samsung Electronics and Texas Instruments announced plans for at least $47 billion of investments in their separate semiconductor operations last year, according to Gov. Greg Abbott. 

"This legislation will assist the United States in cementing a secure semiconductor supply chain, which is vital to our nation’s economy and national security, and better equip Texas to compete for investment in this industry,” Abbott said in a statement. 

Corporate Investment 

Samsung picked Taylor, Texas, a small town north of Austin, last year as the site to build a $17 billion semiconductor plant. Since then, Samsung filed paperwork with the state to build an additional 11 fabrication plants in Central Texas — an investment valued at up to $192 billion — over the next 20 years. But that investment largely hinges on the passage of the CHIPS Act, according to Abbott. 

However, the bipartisan CHIPS Act faces some opposition, and there are no guarantees further delays won't crop up. 

Sen. Bernie Sanders from Vermont voted against advancing the CHIPS Act on Tuesday. Sanders, in a prepared statement issued last week, called the CHIPS Act “corporate welfare" and said it would add at least $76 billion to the national deficit. He urged Biden and his congressional colleagues to avoid giving chipmaking corporations a “blank check” at taxpayer expense. 

Sanders said he supports efforts to expand U.S. microchip production to help with the global chip shortage that "is costing American workers good jobs and raising prices for families." But he doesn't think American taxpayers should be footing the bill when semiconductor companies are making tens of billions of dollars in profits and paying their executives "exorbitant compensation packages," according to the statement. 

The editorial board of the Wall Street Journal also opposed the CHIPS Act, stating the U.S. semiconductor industry doesn’t trail China in several factors and isn’t in need of $52 billion of incentives. 

“Seven of the world’s 10 largest semiconductor companies are based" in the United States and China trails American companies by years when it comes to semiconductor technology, the board stated in an op-ed last week. 

In addition, some companies are already investing billions of dollars in U.S. semiconductor plants, eliminating any urgency in the need for government subsidies, the editorial board said. For example, Taiwan Semiconductor Manufacturing Co. broke ground on a $12 billion semiconductor plant in Arizona last year, and Intel started construction on two factories valued at $20 billion last year in Arizona. 

Biden, meanwhile, virtually met with members of his administration and representatives from the semiconductor industry about the CHIPS Act Monday, according to administration officials. 

“This CHIPS bill is an important piece of it to be able to stay in the game and be the most competitive nation in the world. That’s what we have to reestablish,” Biden said during the virtual meeting, according to a transcript. “We still are in a lot of places, but we got to do it here.” 

The president added he hoped to sign the bill into law as soon as possible. 

“This bill is going to supercharge our efforts to make semiconductors — those tiny chips the size of a fingerprint, which is — you know, some are large, but the size of a fingerprint — that power our everyday lives in America,” Biden said, according to the transcript.