Governors make bipartisan push for CHIPS for America Act but others criticize subsidy

Arizona Gov. Doug Ducey, alongside Gov. Kate Brown of Oregon and Gov. Brad Little in Idaho, are asking Congress to pass two bills in support of domestic semiconductor production.

The letter stated, “The federal investments in the CHIPS for America Act as well as the Investment Tax Credit will help grow domestic semiconductor manufacturing, support the development of cutting-edge technological innovation, and expand our high-tech workforce.”

The CHIPS Act comes as a response to an expedited increase in overseas production of microchips, predominantly in China. According to the Semiconductor Industry Association, the United States produced 37% of the world’s chip supply in 1990, and only 12% today. By 2030, China is projected to become the world’s largest microchip producer.

The bipartisan team of governors hopes to subsidize American chip production through two bills: the $52 billion CHIPS Act and the $24 billion tax credit for domestic semiconductor companies.

The bill became law in January, and the $52 billion investment was passed by the Senate in March. Now it awaits approval from the House of Representatives.

FreedomWorks, a free-market organization, opposes the measure, saying it props up an industry that would be better assisted with fewer regulations.

FreedomWorks said, “Corporate welfare does not make America more competitive; It only increases government dependence. Instead, lawmakers should be looking at reducing the regulatory and tax burdens that drove American businesses offshore in the first place.”

Though the bill is costly, others believe it is worth the investment, such as the West Coast-based Intel Corporation, the largest semiconductor producer by revenue in the world.

The company recently invested in domestic production by breaking ground on two new semiconductor factories in Chandler, Arizona, at the Ocotillo campus. Microchip production would then provide additional jobs through testing and development, such as at their preexisting Folsom, California campus. The project has a price tag of $20 billion, making it the largest private-sector investment in Arizona history.

“As the world comes to grips with chip shortages due to supply chain disruptions and ripple-effects from the global pandemic, Intel’s leaders are urging Congress to fund the CHIPS for America Act to create a more stable future for the U.S. tech industry,” the company said in a statement.

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