The United States House of Representatives unveiled a bill to boost American research and development in order to compete more effectively with China and to support the local semiconductor sector.
As supply chain bottlenecks have been exacerbated by shortages of critical components used in automobiles and computers, the Biden administration is urging Congress to approve funding to boost chip production in the country.
According to a government survey of more than 150 companies, the United States is facing an "alarming" shortage of semiconductors, which is threatening factory production and fueling inflation, Commerce Secretary Gina Raimondo said in an interview on Monday.
Raimondo stated that the findings demonstrated a critical requirement to aid domestic manufacturing and urged Congress to pass legislation aimed at enhancing the United States' competitiveness with China by enabling more American manufacturing.
In a statement from House Speaker Nancy Pelosi, major components of this package have already passed the House with a bipartisan majority.
"We look forward to conferring with the Senate on this bill in order to expeditiously get legislation to the President's desk," she said, according to Bloomberg.
The findings indicate that demand for the chips that power automobiles, electronics, medical devices, and other products far exceeds supply, despite the fact that global chip manufacturers are approaching their maximum production capacity.
While demand for semiconductors increased by 17% between 2019 and 2021, supply did not keep pace.
Based on the U.S. Commerce Department's data, the vast majority of semiconductor fabrication plants are operating at about 90% of their capacity, indicating that they have little immediate capacity to expand production.
President Joe Biden's administration has made the bill a priority, particularly the nearly $52 billion in grants and incentives for the semiconductor industry in response to a global chip shortage.
The House bill includes the same $52 billion in emergency funding for the semiconductor industry that was included in the Senate bill as part of the CHIPS for America Act.
Additionally, it authorizes $45 billion in grants and loans to support supply chain resilience and critical goods manufacturing in the U.S.
Further, it incorporates climate-related provisions from the House Foreign Affairs Committee's EAGLE Act, which aides say is critical to ensuring the U.S. takes the lead in combating climate change.
These provisions infuriated committee Republicans, and the bill was ultimately passed along party lines.
Republicans signaled Tuesday that they would oppose the released bill because of a number of concerns, describing the legislation as a fruitless messaging attempt.