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US Senate Majority Leader Chuck Schumer addressing reporters in Washington on Tuesday. The New York Democrat says passing the semiconductor bill is crucial to solving America’s chip shortage. Photo: AP

Senate ‘test vote’ shows support for bill providing $52 billion to US semiconductor industry to out-compete China

  • America’s status as ‘number one economy and innovator in the world’ at stake, says Senate Majority Leader Chuck Schumer as he urges passage
  • But other China priorities in competition bill could falter as negotiations get entwined in policy debates and political divisions in Congress

The US Senate appears likely to pass legislation that would deliver billions of dollars of federal funding to the American semiconductor industry, a top priority in the Biden administration’s continuing efforts to out-compete China, after a preliminary vote on Tuesday.

The Senate’s procedural vote passed 64 to 34, but the legislation will still require additional voting rounds before final passage in the chamber.

If the bill ultimately passes both chambers of Congress and becomes law, the legislation would provide about $52 billion to the semiconductor industry, which produces the microchips essential to everything from weapons to household goods to video games to cars.

“Advancing this bill is crucial for lowering costs, solving our nation’s chip shortage and making sure America remains competitive in the 21st century,” Senate Majority Leader Chuck Schumer, a New York Democrat, said moments before voting, referring to the vote as a “test”.

“America will fall behind in so many areas if we don’t pass this bill, and we could very well lose our ranking as the number one economy and innovator in the world if we can’t pass this.”

For more than a year, the semiconductor funding has been at the heart of sprawling legislation meant to boost Washington over Beijing in the quest for a greater share of global chip production.
The Senate passed its own version of that broader competition bill, which touched on nearly every aspect of the US-China rivalry and drew substantial bipartisan support last June.

In February, Democrats in the House of Representatives passed their own version of the competition legislation, but did so on what was essentially a party-line vote.

Since the spring, the two chambers of Congress have been engaged in a rare bipartisan, bicameral negotiation process to try and resolve their differences and produce a compromise version of the bill that can attract enough votes to become law.

But the negotiations have become entwined in other policy debates and political divisions in Congress.

US lawmakers reach compromise on screening investments in China

Late last month, Senate minority leader Mitch McConnell warned he would block the China competition legislation if Democrats tried to rush through a separate, unrelated bill that would raise corporate taxes and spend money to fight climate change.
Beyond the semiconductor industry funding, different versions of the China competition bill have also included priorities related to human rights in China, science research funding in America, and US alliances around China’s periphery.
One recent version of the bill would create a human rights envoy for China’s far-west Xinjiang region, where Washington says Beijing is committing genocide and crimes against humanity aimed at the Muslim Uygur ethnic group.
It would also strengthen US ties to Taiwan, and change the name of Taipei’s de facto embassy in Washington to “Taiwan Representative Office in the United States” – a move welcomed by Taiwan, but certain to infuriate Beijing, which views the self-governed island as its own territory.

The status of those other China-related provisions is now uncertain. Lawmakers were scrambling on Tuesday in the hours before the vote to include other hard-fought priorities in the bill, but a final draft was not immediately available to the public as voting began.

Were the $52 billion in semiconductor industry funding to become law, lawmakers could still continue to negotiate a separate compromise on the rest of the competition bill, but it is unclear if they would do so.

In theory, the House could also set up a vote to pass the Senate’s version of the competition legislation, which already passed the Senate last June. But it is unclear whether House Democratic leadership would be willing to act on such a major bill if it was written entirely by the Senate, without input from their own members.

Lawmakers will also soon be leaving Washington for their August recess, and after that will spend much more time on their campaigns leading up to the midterm elections on November 8. One-third of the Senate and the entire House of Representatives will be on the ballot.

Additional reporting by Owen Churchill

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