House leaders on Tuesday unveiled their version of legislation aimed at bolstering the United States’ competitiveness with China, including $52 billion in federal subsidies to boost semiconductor manufacturing.

What You Need To Know

  • House leaders on Tuesday unveiled their version of legislation aimed at bolstering the United States’ competitiveness with China

  • The bill includes $52 billion in federal subsidies to boost semiconductor manufacturing and  $45 billion to bolster supply chain resilience

  • The news comes on the heels of a report from the U.S. Commerce Department warning of a severe computer chip shortage nationwide; Some manufacturers were down to less than five days’ worth of inventory, down from roughly 40 days of supply in 2019

  • The Senate passed their own version of the bill, known as the U.S. Innovation and Competition Act (USICA), a major priority of Senate Majority Leader Chuck Schumer, D-N.Y., in June of 2021 in a widely bipartisan 68-32 vote

In addition to the much-needed investments in domestic chip research and development, the bill — known as the America Competes Act — also includes $45 billion to bolster supply chain resilience by funding critical machinery to allow supply chains to continue running amid disruption of global trade routes, as well as the domestic production of essential goods. 

“The House legislation will supercharge our investment in CHIPS, advance manufacturing at home, strengthen our supply chain, transform our research capacity and advance our competitiveness and leadership abroad, plus many other key provisions,” House Speaker Nancy Pelosi said in a statement on Tuesday.

“Now is the time to recommit to boldly and strategically investing in our nation’s future, and to do so in a way that strengthens the supply chain, lowers costs and ensures that America can out-compete any nation, today and for decades to come,” she added.

The news comes on the heels of a report from the U.S. Commerce Department warning of a severe computer chip shortage nationwide. Some manufacturers were down to less than five days’ worth of inventory, down from roughly 40 days of supply in 2019, according to a survey of companies conducted by the department in September.

“This means a disruption overseas, which might shut down a semiconductor plant for 2-3 weeks, has the potential to disable a manufacturing facility and furlough workers in the United States if that facility only has 3-5 days of inventory,” the report reads.

Commerce Secretary Gina Raimondo said Tuesday that the lack of supply leaves “no room for error,” urging Congress to act quickly.

“A covid outbreak, a storm, a natural disaster, political instability, problem with equipment — really anything that disrupts a facility anywhere in the world, we will feel the ramifications here in the United States of America,” Raimondo said Tuesday. “A covid outbreak in Malaysia has the potential to shut down a manufacturing facility in America.”

The Senate passed their own version of the bill, known as the U.S. Innovation and Competition Act (USICA), a major priority of Senate Majority Leader Chuck Schumer, D-N.Y., in June of 2021 in a widely bipartisan 68-32 vote.

Schumer said Tuesday that he looks forward to conferencing with the House to reconcile their differences on the bill quickly.

“We have no time to waste in improving American competitiveness, strengthening our lead in global innovation, and addressing supply chain challenges, including in the semiconductor industry, Schumer said in a statement.

“The stakes we face are enormous: if we do not invest now in researching, developing, and manufacturing the technologies of the future, we risk falling behind China and other global competitors, endangering U.S. jobs, intellectual property, and national security,” he added. “These strong investments in innovation are absolutely critical to maintaining America’s leadership into the next century.”

One of the components the House bill does not contain, compared to its $2.5 billion Senate counterpart, is the nearly $200 billion devoted to bolstering research and development to compete with China. 

But the supply chain funding is seen as largely significant; it could be utilized to “relocate a manufacturing facility out of countries of concern, including countries that pose a significant economic or national security threat to the United States” or establish strategic stockpiles and reserves “to maintain the availability of critical goods during supply chain shocks," the House lawmakers wrote.

Both bills have the vehement support of President Joe Biden, who said in a statement that the House’s measure “will make our supply chains stronger and reinvigorate the innovation engine of our economy to outcompete China and the rest of the world for decades to come.”

The news comes on the heels of Intel’s announcement that it’s investing more than $20 billion to build a new computer chip facility in Ohio, which the president hailed as “truly historic.”

“To be able to say ‘Made in Ohio,’ ‘Made in America’ — it’s what we used to always be able to say 25, 30 years ago,” Biden said last week. “That's what this is about.”

“The proposals laid out by the House and Senate represent the sort of transformational investments in our industrial base and research and development that helped power the United States to lead the global economy in the 20th century and expand opportunity for middle class families,” the president wrote in his statement, adding that competitiveness legislation “will power our economy to create good-paying jobs for all Americans, no matter where you live or whether you have a college degree, and will help tackle the climate crisis.”

The House is expected to vote on the bill as soon as next week. Biden said he was “heartened by Congress’ bipartisan work so far, and its commitment to quick action to get this to my desk as soon as possible.”