The Senate voted on Wednesday to help the U.S. compete with China by injecting tens of billions of dollars into the domestic production of chip manufacturing.
The bill was approved in a 64-33 vote. It will go to the House, where it will be sent to the White House for President Joe Biden to sign.
The chip bill is a major victory for American families and the American economy according to Nancy Pelosi.
Tax credits to encourage investment in chip manufacturing are included in the package. Funding is provided to spur the development of other U.S. technologies.
It is vital to America's economy and national security to build more chips, which are increasingly critical components in everyday household items, as technological innovation makes machines smarter.
The sudden shift in consumer demand related to the Covid-19 outbreak has caused a shortage of the chips. The US's share of global chip production has fallen steeply in recent decades, while China and other nations have invested heavily in the industry.
Taiwan is the epicenter of rising political tensions with China and it's where most of the most advanced types of Semiconductor are made.
The U.S. defense officials are worried about the nation's dependence on foreign producers for its chip supply.
A disruption to our chip supply would be catastrophic, according to Jake Sullivan, the national security advisor.
He said that the longer we waited, the more dangerous the disruption would be.
The president blamed the shortage of chips for the high inflation that has plagued his presidency. Prices for used cars are pushing inflation higher because of a lack of chips in new cars.
America's invention of the Semiconductor. Biden said it was time to bring it back.
Biden hailed the bill as an historic one that would lower costs and create jobs. It will lead to more resilient American supply chains so we are never so reliant on foreign countries for the critical technologies that we need for American consumers and national security.
The legislation that was stewing in the House and Senate was called CHIPS-plus. Republicans threatened the larger measure earlier this month. A simple majority in the 100 seat chamber is required for a shoe-in final vote.
The legislation had faced criticism from some Senate Republicans, such as Florida's Marco Rubio, who said it lacked "guardrails" to prevent any of the funding from winding up in China's hands Critics argue that the U.S. would have to spend a lot more to compete with the world's top chipmakers.
The previous version of the bill was called a "$53 billion blank check to profitable microchip and Semiconductor companies" by Sen.
"Let us build back the U.S. chip industry, but let us do it in a way that benefits all of our society, not just a few wealthy profitable corporations."
Schumer said the legislation will mark a turning point for American leadership in the 21st century.
The Senate voted to approve one of the largest investments in science, technology and manufacturing in decades.
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