Senate passes bill to boost computer chip production in U.S.

While Senator Wicker voted in favor of the legislation, Senator Hyde-Smith voted against it, expressing concerns over deficit spending.

On Wednesday, the U.S. Senate passed the CHIPS Act (HR.4346) by a 64-33 vote. The legislation would earmark billions in federal funds to boost U.S. semiconductor production amid a nationwide chip shortage. The measure contains research and development and science, technology, engineering, and math (STEM) education provisions.

According to a fact sheet released by U.S. Senator Roger Wicker (R-MS), Ranking Member of the Senate Committee on Commerce, Science, and Transportation, the new CHIPS Act will add important research security guardrails to protect U.S. intellectual property, including:

• Empower NSF Research Security – Requires NSF to maintain a Research Security and Policy Office to identify potential security risks.
• Train researchers on best practices and prohibit federal employees and university researchers from participating in so-called malign foreign talent recruitment programs – Requires covered individuals seeking funding from federal research agencies to complete annual training on research security.  Creates a Research Security and Integrity Information Sharing Organization that would serve as a clearinghouse for institutions and researchers to identify improper and illegal efforts to compromise research security.
• Ensure transparency – Requires universities applying for National Science Foundation funds to disclose agreements and gifts from China and other “foreign countries of concern.” Also prohibits NSF funding from going to universities with Confucius Institutes.

The legislation would also reduce historic disparities in research funding allocations, ensuring more universities can participate in U.S. efforts to outcompete with China.

Wicker says the new CHIPS Act includes important components of USICA that would help correct this concentration of R&D funding, including provisions that would:

• Establish a 20 percent set-aside of NSF funding and scholarships for EPSCoR jurisdictions (25 states + 3 territories).
• Establish a new $10 billion Regional Technology Hub program to drive technology development in parts of America outside of established high-tech locations.

The Act would boost research funding and STEM education opportunities for critical industries. It includes many of those provisions, which amount to a total of $36 billion in additional funding for NSF over the next five years. This additional funding will invest in technology research critical for national and economic security, build the STEM workforce and expand rural STEM education, and build broad-based research opportunities.

Senator Wicker said that the CHIPS Act of 2022 creates a comprehensive response to China’s growing technology dominance, which poses a massive threat to our national security.

“The new language includes many research funding, security, and STEM education provisions that are essential if the U.S. hopes to outcompete China and protect our intellectual property,” Wicker added.

However, Mississippi’s other U.S. Senator Cindy Hyde-Smith said that while she understands the need to ramp up American semiconductor production and to fortify the nation’s competitive edge, she does not believe faulty legislation that relies on deficit spending is the smart way to reach those goals, particularly without sufficient assurances that adversaries like China would not ultimately benefit from its measures.

“I fully understand the need for the United States to strengthen our competitive edge for economic and security reasons.  Our industries, our economy, and the American people are hurting because we can’t produce more chips on our own,” Hyde-Smith said.

“The massive CHIPS Act has good provisions, but it perpetuates more deficit spending to support profitable industries that already plan to expand without taxpayer subsidies,” Hyde-Smith continued.  “I just think Congress should pay more attention to fiscal responsibility even when considering important legislation intended to spur greater American innovation.”

A press release from Senator Hyde-Smith’s office said that the bill would provide $52 billion in subsidies and $24.3 billion in investment tax credits for U.S. chip manufacturing over the next 10 years.

A Congressional Budget Office estimate indicated this portion of the bill would add $79.3 billion to the debt.

“The measure also includes a $102 billion authorization over five years to increase research and development investments by the National Science Foundation, U.S. Commerce Department, and other federal agencies,” Hyde-Smith’s press release said.

“The Senate Budget Committee also determined, among other things, provisions in the bill would exempt certain CHIPS Act spending from statutory pay-go scorekeeping and future budget enforcement sequestrations,” the press release continued. “The measure has also been criticized for lacking sufficient safeguards to ensure it does not benefit China or companies, universities, and others with links to the Chinese Communist Party. The Senate also didn’t consider amendments to prevent CHIPS Act investments from shifting to Asia where U.S. manufacturers maintain supply and production facilities.”