China competitiveness bill includes $52B for chips

  • Hundreds of new Ford F-150 pickup trucks sit on a lot of the Department of Public Works rail yard in Detroit on April 15. The trucks are waiting for semiconductors, which have been in limited supply globally because of COVID-19 disruption. (Photo/Eric Seals/Mani Wright/Detroit Free Press/TNS)

The U.S. Senate adopted a major piece of legislation June 8 that directs $52 billion in emergency spending toward domestic semiconductor chip manufacturing and boosts “Buy American” rules pushed by Michigan’s senators.

Senators gave the measure bipartisan support, voting 68-32 to pass the Democrat-led bill in the narrowly divided chamber and send it to the House for consideration.

The bill, known as the “U.S. Innovation and Competition Act,” aims to incentivize U.S. manufacturing of the chips, which are primarily produced overseas and which power electronics and key components of modern cars, trucks and SUVs, such as power steering, engine management and infotainment displays.

A chip shortage blamed on the pandemic has caused automakers to idle plants nationwide and is expected to cost the industry around $110 billion in lost revenue globally.

The broader $250 billion bill is meant to super-charge the United States’ economic competitiveness with China by devoting billions to research and development in science and high-tech sectors to help American companies better counter their Chinese rivals. The legislation is led by Sen. Chuck Schumer of New York, the majority leader, and Sen. Todd Young, R-Ind.

“This bill takes a number of steps to ensure we can continue to lead in manufacturing through the 21st century — especially as new technologies come online,” said Michigan Sen. Gary Peters.

“We know that our global competitors — including the Chinese government — are making significant investments in research and development, and we must ensure Michigan and the U.S. can continue to lead the way in manufacturing and innovation.”

The legislation includes $50 billion for semiconductor chips plus $2 billion specifically for “legacy” chips aimed at helping automakers — a provision which Peters and Michigan Sen. Debbie Stabenow worked to incorporate in the bill.

The chip section of the bill directs the U.S. Department of Commerce to establish a program that would administer grants for domestic semiconductor production. An amendment that Peters got attached to the bill in the Senate Commerce committee prioritizes $2 billion for industries critical to advancing economic and national security — a nod to the auto industry.

The advocacy group Alliance for Automotive Innovation applauded the Senate’s passage, saying it indicates that lawmakers understand and are prioritizing a “critical issue.”

“New foundries take years to build, and getting policies implemented that support increased chip capacity in the near-, mid- and long-term is key,” Auto Innovators president and CEO John Bozzella said.

The provision from the Michigan senators also included a requirement that any funded projects pay workers prevailing wage — something that Republicans complained about at the committee level.

The Senate voted on an amendment from Sen. John Cornyn, R-Texas, to strip out the prevailing wage provision, but it failed, by a vote of 42-58.

The legislation also includes Stabenow’s and Peters’ bill to close loopholes in the decades-old “Buy American” law that gives preference to American companies in government purchasing.

The law includes certain exceptions and waivers for federal agencies to avoid the requirements of the law when there’s limited availability and quality of U.S.-made products, or in cases when it’s in the public interest, for example.

The senators’ measure would eliminate the ability to use the public interest waiver if a foreign contract would decrease employment in the U.S. and would require that waivers be posted online with justifications.

It would also establish a new “Made in America Office” within the White House Office of Management and Budget, which would review waivers to the Buy American Act and target compliance with other Buy American laws, according to Stabenow’s office.

“We are now at a crucial moment in our competition to win the clean energy manufacturing future for America and eliminate the real vulnerabilities we are seeing in our supply chains,” Stabenow said in a statement.

“My provisions that we are passing today address our long-term semiconductor shortage, close loopholes that allow the federal government to get around Buy American requirements, and will create new good-paying jobs right here in Michigan.”

Updated: 
06/16/2021 - 9:43am