U.S. Senate advances chip funding bill to encourage local semiconductor manufacturing

The chips bill was supported by the US Senate. The bill will pave the way for a lot of incentives for U.S based chip making.

There are three major incentives for chipmakers in the bill: $52 billion of assistance in setting up Fabs and manufacturing units, $2 billion for legacy chipmaking essential to the auto and defense industry, and 25% in tax relief for investment in local.

A version of this bill passed the Senate last year but was held up in the House, and now it faces another hurdle before the August recess.

The Semiconductor Industry Association welcomed the Senate's vote.

Legislation that will strengthen American chip production and innovation, economic growth and job creation, and national security is one of the things that will be strengthened by today's bipartisan vote. We applaud today's Senate vote and urge swift passage of the CHIPS Act in both the Senate and House. America has a historic opportunity to re-inspire domestic chip manufacturing, design, and research, and Congress should seize it before it's too late.

After the global chip shortage affected many industries, the U.S. has been pushing this bill to increase local manufacturing. In an interview with CNBC on Tuesday, Senator Todd Young mentioned reliance on South Korea and Taiwan for critical chips and said that "we just can't be that dependent on countries so far away."

In the past few years, many companies have committed to setting up manufacturing in the U.S. A $17 billion investment was made by the company last year. South Korea's SK Group, which held virtual talks with Presiden Joe Biden this week, said it will invest $22 billion in the U.S.