US House passes Bill to boost domestic chip manufacturing

US President Joe Biden reacts after being handed a note stating that Congress passed the semiconductor chips Bill. PHOTO: EPA-EFE

WASHINGTON (AFP) - The US House of Representatives passed a Bill on Thursday (July 28) to boost domestic production of semiconductors, the in-demand microchips that power everything from smartphones to cars and weapons.

The Chips Act was approved by the House in a 243-187 vote with 24 Republicans joining Democrats and now goes to President Joe Biden for his signature.

Biden had lobbied strongly for passage of the Bill, which will increase US competitiveness with major chip-maker China.

He welcomed its approval, saying it will "lower the costs of every day goods."

"And, it will create high-paying manufacturing jobs across the country and strengthen US leadership in the industries of the future at the same time," the president said in a statement.

"By making more semiconductors in the United States, this Bill will increase domestic manufacturing and lower costs for families," he said.

"And, it will strengthen our national security by making us less dependent on foreign sources of semiconductors."

The legislation provides US$52 billion (S$70 billion) to increase domestic semiconductor production and more than US$100 billion over five years for research and development.

The Chips Act was passed on Wednesday in the Senate by a rare bipartisan vote of 64 to 33, with 17 Republicans joining hands with Democrats.

Global semiconductor supplies were disrupted by fallout from Covid-19 shutdowns, sparking widespread shortages of the chips - many of which are made in Asia.

Worldwide chip shortages notably slowed production of new automobiles last year, causing prices to increase.

Passage of the Chips Act by the House came shortly after a lengthy telephone call between Biden and Chinese President Xi Jinping.

China criticised details of the Bill earlier on Thursday.

Foreign ministry spokesman Zhao Lijian said that while the act "claims to be aimed at improving the competitiveness of US technology and chips, (it) contains provisions that restrict normal scientific and technological cooperation between China and the United States.

"China is firmly opposed to this," Zhao told reporters.

Senate passage of the Bill came a day after the South Korean group SK announced a huge investment in US semiconductors and other cutting-edge industries.

The conglomerate said in a statement it plans to "increase its new investment in the United States by US$22 billion in areas including semiconductors, green energy, and bioscience, creating tens of thousands of new high-tech, high-paying American jobs."

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