In a bipartisan vote on Wednesday, the U.S. Senate adopted legislation that will invest $52 billion in domestic production of semiconductor chips vital to the automobile industry and other manufacturers, opening the door to construction of a dozen new fabrication plants in an industry that Virginia knows well.
The CHIPS+ Act, as it is now known, passed the Senate 64-33 and now moves to the House of Representatives. The House will have its second chance in a year to send legislation to President Joe Biden that supporters say will create jobs, reduce inflation and bolster national security by offsetting Chinese ambitions to control a crucial piece in the global supply chain for microelectronics.
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“This is the first step of the U.S. regaining its leadership in technology and innovation,” Sen. Mark Warner, D-Va., said in a news briefing before the Senate voted on legislation that he helped write.
With thousands of vehicles sitting unfinished on factory lots because they lack semiconductor chips to guide them, Warner said the legislation “won’t solve the problem overnight, but it will send a signal to the markets that America is back in the game in this critical component of microelectronics.”
Sen. Tim Kaine, D-Va., voted for the legislation. “Increasing chip manufacturing in Virginia and throughout America is a win-win-win for job creation, our national security and lowering costs — all while helping us out-compete China,” Kaine said in a statement.
Warner said he is in “active conversations” about bringing one of the chip manufacturing projects to Virginia, which already hosts Micron Technology’s expanding manufacturing facility in Manassas.
The funding package also includes $11 billion to develop 10 regional technology hubs, which already has attracted attention of leaders in Southwest and Southside Virginia who are looking for economic development opportunities in regions that need them.
“I am working already with a series of regions across Virginia to see if we can secure one of these technology hubs,” Warner said.
The legislation already has sent a signal to Henrico County, which hopes it will enable the county to attract a new semiconductor factory to the White Oak Technology Park that previously hosted the Qimonda chip manufacturing plant that closed during the Great Recession.
“We’re ready,” said Anthony Romanello, executive director of the Henrico Economic Development Authority. “We’ve got shovel-ready sites with utilities to accommodate the semiconductor industry.”
“This bill is going to help level the playing field with our competitors overseas, so it’s great news,” Romanello said Wednesday. “We can move as quickly as anyone wants to move.”
The Senate passed a similar bill more than a year ago, only to watch it idle in the House because of political wrangling over Biden’s failed “Build Back Better” spending package, but Warner said Wednesday that House leaders have assured him “they will take up the bill we pass and pass it immediately.”
“You talk about frustrating. ... If the House had taken this up last year and passed it, we would have seen at least $50 billion of additional investment in the United States just in the past year,” he said.
Rep. Abigail Spanberger, D-7th, publicly criticized House Democratic leaders last year for delaying action on the legislation and then adding provisions that forced the measure into conference committee for negotiation with the Senate.
“While we cannot go back in time, we can move this bill to the President’s desk with a straight-forward vote on the House floor,” Spanberger said in a statement Wednesday. “We should do so as soon as possible.”
Spanberger also welcomed the opportunity created by the vote to allow the Senate to vote separately as early as next week on legislation to allow Medicare to negotiate prices for prescription drugs directly with pharmaceutical companies to lower costs for elderly Americans who depend on them.
Senate Minority Leader Mitch McConnell, R-Ky., voted for a slimmed-down version of the CHIPS+ Act on Wednesday, after previously threatening to block its passage if Senate Democrats attempted to use the budget reconciliation process to adopt legislation on prescription drug prices and maintaining federal subsidies for health insurance premiums under the Affordable Care Act.
“I’m pleased that we’re moving on all fronts,” Spanberger said in a video news conference with AARP on Wednesday to build public support for the reconciliation package.
Jim Dau, director of AARP Virginia, said the package is essential both to prevent insurance premiums from rising for lower-income Virginians who buy policies on the federal marketplace and to reduce prescription drug prices that he contends are a reason for high inflation.
“Prescription drugs should be the poster child for runaway inflation,” Dau said.
The White House said Wednesday that it feels the same about the semiconductor legislation, which supporters contend will lower the cost of automobiles and other consumer products that depend on them. The United States manufactured 37% of the world chip supply in the mid-1990s, but now produces just 12%.
In a background news briefing, senior administration officials said anything that would increase the flow of semiconductor chips into the economy would help relieve what one called “supply-side constraints” that have contributed to the highest rate of inflation in 40 years.
Most semiconductor chips, including those used in U.S. military equipment, come from manufacturers in East Asia, especially China and Taiwan, which remains vulnerable to Chinese military or economic threats.
“It is a national security priority,” said Spanberger, a former CIA case officer. “It is an economic priority.”
In addition to semiconductor chips, the legislation includes money for research in the next generation of telecommunications technology and big investments in scientific research and development.
It includes $81 billion in authorized funding for research and development by the National Science Foundation and $13 billion to expand education and training in science, technology, engineering and math careers.
“America has a lot to gain with this bill not only because it’ll strengthen our manufacturing economy,” Kaine said, but also because it will boost research institutions.