A $52B US chip subsidy bill has convincingly passed a new Senate vote, with 64 in favor and just 34 opposed. Apple has said that the subsidy is ‘vital’ to the construction of a TSMC chip-making plant in Arizona, which is expected to make chips for the Cupertino company.
The latest vote had been described as a test of whether there was sufficient backing to include additional funding for science and defense research …
Background
The Senate last year approved $52B in funding to boost US chip production, with the House adding its support in February of this year. The motivation was two-fold. First, to address the global chip shortage.
The shortage was created by a mix of factors. These include increased demand for technology during the pandemic, COVID-related production disruption, and a growing demand for chips by car-makers; as cars rely on increasing numbers of microprocessor units.
The biggest issue is not with CPUs and GPUs, but far more mundane chips like display drivers and power management systems. These relatively low-tech chips are used in a huge number of devices, including Apple ones.
Apple CEO Tim Cook revealed that supply constraints cost Apple $6B in two quarters, and warned that the hit could be as high as $8B in fiscal Q3.
A recent report says that there have been shortages across seven chip categories, and that four of them will continue to be affected throughout 2022.
Second, a desire to ensure that the US isn’t left behind by China – or left overly dependent on it.
Despite bipartisan support, politicians were having difficulties agreeing on the details, with some expressing concerns that the bill may not pass at all. The proposed subsidy has gone through various iterations, with different politicians wanting to add in funding for other issues, and it is this secondary funding which has caused controversy.
US chip subsidy bill now likely to be expanded
The WSJ reports that the latest version of the bill was easily passed, and is likely to pave the way for the inclusion of additional science and defense spending.
Ahead of the vote, Senate Majority Leader Chuck Schumer (D., N.Y.) said he would use the result to gauge whether there was enough Republican support for the additional funding, which has been under negotiation for more than a year.
“This will be a test vote, and the outcome will decide whether the science portion of USICA is included,” Mr. Schumer said, while adding he personally supports a larger proposal.
Tuesday’s motion needed only 51 votes to pass, but Mr. Schumer said because it received more than 60 votes, enough to comfortably overcome a Senate filibuster and advance, he would move forward with adding the science funding. That would back early-stage research using technology in water systems, technology and behavioral health, precision agriculture and other sectors. It would also bolster technology education.
The result is likely to be approval of $190B for US scientific and defense research, in addition to the $52B for chipmaking.
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