News & Politics

Senate Set to Approve Over $50B to Expand Semiconductor Production

Mayors and local leaders hope the subsidies will create more than 1 million jobs nationwide over six years.

Senate Majority Leader Charles Schumer (D-NY) holds a news conference on July 19.

Senate Majority Leader Charles Schumer (D-NY) holds a news conference on July 19. Chip Somodevilla/Getty Images

The Senate is poised to pass a bill as soon as Wednesday that would spend $54.2 billion to boost the production of semiconductors in the U.S. and support other research and development initiatives, a move that mayors and other elected officials hope will create 1.1 million jobs in their communities over the next six years. The lion’s share of the money, $39.4 billion, is aimed at reversing another negative manufacturing trend. The nation produces about 12% of the world’s computer chips, down from 40% in 1990, according to the Congressional Research Service

The measure faced some opposition from senators for giving billions in subsidies to companies. However, Democratic Senate Majority Leader Charles Schumer of New York said during a press conference after the measure passed a procedural hurdle Tuesday that “it is a very significant bill. It will have effects on our children and our grandchildren.” 

The White House in a statement Tuesday called semiconductors “the building blocks of the modern economy.” “They power everything from automobiles, consumer electronics, and household appliances, to the advanced weapons systems necessary for the national defense,” the administration said. 

In addition to reducing dependence on Chinese computer chips, the bill is fueling local leaders’ and governors’ hopes of job-rich facilities opening up in their communities. GlobalFoundries already has promised that if the bill passes, it would build a new computer chip factory in Saratoga County, New York, next to its existing one.

“It would be huge,” said Patrick Bailey, a spokesman for the Business Council of New York State. “There used to be a time when you could find manufacturing in pretty much all parts of the state. A lot of those jobs are gone now.”

The measure “invests in America’s workers and provides economic stability to American families,” U.S. Conference of Mayors CEO and Executive Director Tom Cochran wrote congressional leaders last week, urging them to pass the bill.

The bill also has the support of the nation’s governors. In a statement last week, National Governors Association chairman, Gov. Asa Hutchinson of Arkansas, a Republican, and vice chairman, Gov. Phil Murphy of New Jersey, a Democrat, said the measure is “absolutely critical to our national security and will allow us to address gaps and vulnerabilities in the U.S. supply chain.”

Extraordinary Job Growth Expected

According to a Semiconductor Industry Association study, about 277,000 U.S. workers are employed in the research and development, design and manufacturing of computer chips. Nearly a quarter are in California, followed by 16% in Texas and 15% in Oregon.

The association said hundreds of thousands more jobs could come with the bill’s passage. It estimates that $50 billion in federal investment in the industry, along the lines of what Congress is considering, would create 185,000 semiconductor jobs each of the next six years, as well as hundreds of thousands of other jobs at companies that supply the industry.

In addition, the bill will provide billions in funding for semiconductor research and workforce development, spurring hopes in college towns. For example, Purdue University in West Lafayette, Indiana, and the State University of New York at Albany, want money to create semiconductor research centers.

The measure, after passing the Senate, will head to the House where Speaker Nancy Pelosi, a California Democrat, has vowed to quickly send it to Biden’s desk for his signature.