A year-long, bipartisan push for a $280 billion bill to boost the nation’s ability to compete with Chinese technology and address the global semiconductor chip shortage finally is paying off.
Indiana’s own Republican Sen. Todd Young has played a huge role in getting the proposal to the finish line, joining with President Biden and other Democrats to make it a priority. And his involvement has given Indiana economic development officials and university leaders the early heads-up needed to position the state well for significant tech funding and development.
The proposal cleared the Senate Wednesday with bipartisan support. It now heads to the House, where it is also expected to pass. And President Biden could sign it into law as early as this week.
The CHIPS bill, short for Creating Helpful Incentives to Produce Semiconductors for America Act, is critical in reducing the national security risk posed by American reliance on China for computer chips. It’s also key for Indiana and other states in the middle of the country to continue to build a technology industry for the future that isn’t just dominated by coastal cities.
As the Associated Press reported, the bill provides $52 billion in grants and other incentives for the semiconductor industry, tens of billions of dollars to support regional technology hubs and a 25% tax credit for those companies that build U.S. chip plants, or fabs. The cost of the tax break is projected to be $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 funding to help finance a proposed factory and research facility in West Lafayette.
In an interview, SkyWater CEO Thomas Sonderman said the rough plan is for federal and Indiana state funding to pay for two-thirds of the factory, with the rest coming from SkyWater and its chip customers. The facility would most likely make chips for the auto industry, medical-device manufacturers, aerospace customers and the U.S. Department of Defense.
Indiana also has been working on ways to become one of the regional technology hubs envisioned by legislation. As we noted in an editorial more than a year ago, not everyone is happy with the bill. A core group of Republicans is concerned about the bill’s level of spending. Sen. Bernie Sanders, an independent who caucuses with the Democrats, questions the need to subsidize the industry.
We think the opportunities are worth the cost. And it seems obvious that government subsidies are necessary for the United States to compete with other nations that are also spending billions of dollars to lure chip manufacturers. Not only will the bill rev up semiconductor manufacturing in the United States, it also will build the technological infrastructure required to create the innovations needed for the future.•
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