The measure includes $52 billion for domestic chip production and strengthens America’s competitiveness with China.
The US House of Representatives on Thursday passed a bipartisan bill that includes $52 billion in grants and incentives for domestic semiconductor manufacturing, boosting the country’s competitiveness with China. The bill has now been turned over to President Joe Biden for his signature.
The bill passed 243–187 with all Democrats voting in favor of the bill, along with 24 Republicans, even as GOP leaders pushed to oppose it at the last minute. The measure brings victory to the Biden administration more than a year after the law was first introduced in Congress.
Officially known as CHIPS and the Science Act, the bill includes more than $52 billion for American companies that make computer chips as well as billions of dollars in tax credits to encourage them to invest in chip manufacturing. It also provides tens of billions of dollars to fund scientific research and spur innovation and the development of other U.S. technologies like 5G wireless technology.
House Speaker Nancy Pelosi, D-Calif., called the bill “a huge win for American families and the American economy.” “Once enacted, the Science and CHIPS Act will boost our nation’s semiconductor chip manufacturing — boosting American manufacturing and creating nearly 100,000 high-wage jobs,” she added. .
The president signaled that this was a positive step in that direction.
“Today, the House of Representatives passed a bill that will make cars cheaper, home appliances cheaper, and computers cheaper,” Biden said in a statement. “It will reduce the cost of everyday goods. And, it will create well-paying jobs across the country and strengthen U.S. leadership in the industries of the future. “
This measure is expected to help reduce lack of semiconductor, which first hit the auto industry during the COVID-19 pandemic. Manufacturing in China was halted at the beginning of the pandemic while consumer demand for cars and home electronics surged. US chip production has fallen dramatically in recent decades, while China and other countries have invested heavily in the industry.
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Some Republicans oppose the bill, saying it lacks a “handrail” to prevent any funding from flowing into Chinese hands. Other critics argue that for the US to have a chance to truly compete with the world’s top chipmakers, billions of dollars more must be spent.
However, supporters of the bill still argue that increasing domestic chip production is critical to the US economy and national security.
Semiconductor sales expected to decline
Not everyone is optimistic about the immediate future of the semiconductor industry. Globally, Gartner forecasts semiconductor sales to grow 7.4% in 2022, down from 26.3% growth in 2021. This is down from a growth forecast of 13.6. % in 2022 of the previous quarter.
“Although chip shortages are easing, the global semiconductor market is entering a period of weakness, which will last until 2023 when semiconductor sales are expected to decline by 2.5%,” said Richard Gordon. , said Gartner’s vice president of practice. “We have seen weakness in the semiconductor terminal markets, particularly those exposed to consumer spending.”
Gordon quotes increase inflationary, taxes and interest rates, along with higher fuel and energy costs, were the drivers of the decline, as they put pressure on consumers’ disposable incomes. This is affecting spending on electronic products like PCs and smartphones, he said.
PC shipments expected to drop by 13.1% in 2022 after recording growth in 2020 and 2021. PC semiconductor revenue is estimated to decline by 5.4% in 2022 and smartphone semiconductor revenue is on a downward trend to 3.1% in 2022, compared with 24.5% growth in 2021.
“From a business perspective, inventory is recovering rapidly, delivery times are starting to shorten, and prices are starting to weaken,” says Gordon.
