Senate Passes Bill To Improve Semiconductor Shortage With $52 Billion Infusion

Over the past few months, a global semiconductor shortage has constrained the supply of countless different products--from F-150s and Ford Broncos to Nintendo Switch, PS5, and Xbox Series X consoles. With few signs that the shortage will ease on its own, the U.S. government is now one step closer to implementing legislation aimed at alleviating the constraints and improving the availability of the chips.

Called the U.S. Innovation and Competition Act, the bill passed the Senate this week with unusual bipartisan support. 68 Senators voted for the bill compared to 32 against, easily clearing the 60-vote threshold necessary to avoid a filibuster. The bill allocates $52 billion for the semiconductor industry alone, in addition to an array of other investments in the technology industry. Over $200 billion is directed at technological initiatives in total.

The semiconductor shortage has been felt particularly acutely in the PC gaming space, as those looking to build new PCs or buy pre-built ones have had to contend with skyrocketing prices and extensive scarcity in GPU and CPU chips. This bill, if passed into law, may help with these constraints by focusing on building up semiconductor production capacity in the United States. Today, the vast majority of semiconductors are made in foundries in Southeast Asia.

One of the biggest changes in the bill is a massive expansion in the role of the National Science Foundation. Greatly expanding the NSF's budget, the Innovation and Competition Act would also establish a new NSF office to oversee targeted investments in high-tech areas, including artificial intelligence and robotics.

The bill is not without controversy, however. Much of it is geared toward direct competition with China, which has rapidly advanced in AI, semiconductor, and robotics technology research over the past few years. Some opponents suggest that the bill is overly targeted at great-power jockeying with the Chinese government. Others, most notably Senator Bernie Sanders from Vermont, have argued that billions of dollars in investment to already large semiconductor firms would not be effective or equitable.

Now that it has passed the Senate, the bill heads to the House of Representatives to be debated. Senate Majority Leader Chuck Schumer has stated that he will work closely with House Speaker Nancy Pelosi to pass it quickly. If successful in the House, which needs only a simple majority to pass, the bill would then head to President Biden's desk to be signed into law.