CHIPS-Plus Package Passed by Congress

July 29, 2022

Following an exchange of amendments between the Chambers, as well as passage by the Senate on Thursday, the House passed a massive legislative package aimed at boosting domestic production of computer chips and keeping the U.S. competitive on an international level.

Known as the CHIPS-plus package, the bill passed in the southern wing of the Capitol, with 24 House Republicans going against their Party recommendations for a ‘no’ vote due to spending concerns and joining the 243 Democrats in support. 

The Senate passed the $280 billion legislation 64-33, with 17 Republicans backing the measure on Tuesday. This passage was a personal victory for Senate Majority Leader Chuck Schumer (D-N.Y.), who has been pushing a version of this legislation with Sen. Todd Young (R-Ind.) since 2019.

Now heading to President Biden’s desk for signature, the text provides for mandatory appropriations over five years that would designate and establish the “CHIPS for America Fund.” Specifically, the legislation would designate: $39 billion in “financial assistance to build, expand or modernize” domestic semiconductor facilities; up to $6 billion of that can be used in direct loans or loan guarantees; another $11 billion will go toward advanced research and development programs under the Commerce Department; and $2 billion will be used for national defense tech applications or workforce training.  There are “guardrails” included in the legislation, and none of these funds can be used to underwrite stock buybacks or on facilities in China or “any other foreign country of concern.”

Meanwhile, the science provisions include funding authorizations for the National Science Foundation, Energy Department Office of Science, as well as provisions impacting NASA.  The proposal authorizes more than $80 billion for the National Science Foundation – nearly doubling the agency’s current budget – as well as $10 billion for “regional technology hubs.”  

The centerpiece of small business opportunities in the bill is more than $50 billion in subsidies for domestic semiconductor manufacturing and research. Unfortunately, much-needed legislation to reauthorize the highly successful Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs was scrapped from the larger package initially considered by the House. Absent Congressional action, both programs will expire on Sept. 30.

There is also funding for more advanced research and high-tech manufacturing programs under the National Institute of Standards and Technology (NIST), the Energy Department would be authorized to use billions for advanced research programs in a variety of areas, including fusion and lasers, and Congress will provide funding for STEM programs and research grants through this legislation.

According to supporters, the CHIPS-plus package is vital for U.S. economic and national security interests in a world increasingly dependent on technological advancement, with the Congressional Budget Office estimating the legislation to cost the U.S. nearly $80 billion over the next decade.

Senators ultimately agreed to include tax incentives that were not part of broader, previously considered versions of the legislation, including a multi-year, 25 percent investment tax credit for semiconductor plants estimated to cost $24 billion; however, the bill passed by Congress is a slimmed down version of a larger China competitiveness bill the Biden Administration hoped Congress would pass.  With Republican spending concerns, irreconcilable strongholds between the parties, and August recess just around the corner, the CHIPS-plus bill was born. 

President Biden is expected to sign this legislation soon.

Check back here and keep up with NSBA for all of the latest updates on this important initiative.