A year-long, bipartisan push for a $280 billion bill to boost the country’s ability to compete with Chinese technology and address a global semiconductor chip shortage is finally paying off.
Indiana’s own Republican Senator Todd Young played a big role in getting the proposal to the finish line, working with President Biden and other Democrats to make it a priority. And his involvement gave Indiana economic development officials and university leaders the early heads-up needed to position the state well for significant funding and technology development.
The proposal cleared the Senate on Wednesday with bipartisan support. It now heads to the House, where it is also expected to pass. And President Biden could sign this law as early as this week.
The CHIPS bill, short for the Creating Helpful Incentives to Produce Semiconductors for America Act, is critical to reducing the risk to national security posed by America’s reliance on China for computer chips. It is also key for Indiana and other states in the middle of the country to continue to build a technology industry for the future that is not only dominated by coastal cities.
As reported by the Associated Press, the bill provides $52 billion in grants and other incentives for the semiconductor industry, ten billion dollars to support regional technology hubs and a 25% tax credit. for companies building US chip plants, or fabs. The cost of the tax break is estimated at $24 billion over 10 years. Indiana already has a project in mind for the money. Last week, Purdue University and Minnesota-based chipmaker SkyWater Technology said they intend to win part of the fund to help finance a proposed factory and research facility in West Lafayette.
In an interview, SkyWater CEO Thomas Sonderman said the bad plan is for federal and Indiana state funds to pay for two-thirds of the plant, with the rest coming from SkyWater and its customers. The facility will likely make chips for the auto industry, medical device manufacturers, aerospace customers and the US Department of Defense.
Indiana is also working on ways to become one of the regional technology hubs envisioned by the law. As we noted in an editorial over a year ago, not everyone is happy with the bill. A core group of Republicans is concerned about the bill’s spending level. Sen. Bernie Sanders, an independent associated with the Democrats, questioned the need to subsidize the industry.
We think the opportunities are worth the cost. And it seems clear that government subsidies are necessary for the United States to compete with other countries that are also spending billions of dollars to attract chip manufacturers. Not only will the bill transform semiconductor manufacturing in the United States, it will also build the technological infrastructure needed to create the innovations needed for the future.•
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