Senate Democrat proposes $52 billion for U.S. chips production, R&D

U.S. Senate Majority Leader Schumer speaks to reporters during the weekly news conference following the Democratic caucus policy luncheon on Capitol Hill in Washington
U.S. Senate Majority Leader Chuck Schumer (D-NY), with Senator Gary Peters (D-MI) and Senator Bob Menendez (D-NJ), speaks to reporters during the weekly news conference following the Democratic caucus policy luncheon on Capitol Hill in Washington, U.S. May 18, 2021. REUTERS/Jonathan Ernst

WASHINGTON, May 18 (Reuters) - U.S. Senate Democratic Leader Chuck Schumer unveiled revised bipartisan legislation late Tuesday to approve $52 billion to significantly boost U.S. semiconductor chip production and research over five years.

The emergency funding proposal will be included in a more than 1,400-page revised bill the Senate is taking up this week, as first reported by Reuters on Friday, to spend $120 billion on basic U.S. and advanced technology research to better compete with China. read more

"American manufacturing has suffered rather dramatically from a chip shortage," Schumer said. "We simply cannot rely on foreign processors for chips. This amendment will make sure that we don't have to."

The proposal includes $49.5 billion in emergency supplemental appropriations to fund the chip provisions that were included in this year's National Defense Authorization Act, but which require a separate process to garner funding.

President Joe Biden has also called for $50 billion to boost semiconductor production and research.

Supporters of funding note the U.S. had a 37% share of semiconductors and microelectronics production in 1990; today just 12% of semiconductors are manufactured in the United States.

"There is an urgent need for our economic and national security to provide funding to swiftly implement these critical programs. The Chinese Communist Party is aggressively investing over $150 billion in semiconductor manufacturing so they can control this key technology," a bill summary released Tuesday said.

The measure would "support the rapid implementation of the semiconductor provisions" in the defense bill.

As reported by Reuters, the bill includes $39 billion in production and R&D incentives and $10.5 billion to implement programs including the National Semiconductor Technology Center, National Advanced Packaging Manufacturing Program and other R&D programs.

Last month, Ford Motor (F.N) warned the chip shortage might slash its second-quarter production by half, costing it about $2.5 billion and about 1.1 million units of lost production in 2021, while General Motors (GM.N) has extended production halts at several North American factories because of the shortage.

The bill also includes $1.5 billion in emergency funding to help boost Western-based alternatives to Chinese equipment providers Huawei Technologies (HWT.UL) and ZTE Corp (000063.SZ), aiming to accelerate development of an open-architecture model (known as OpenRAN) backed by U.S. carriers.

Another provision prohibits the Chinese-owned social media app TikTok from being downloaded to government devices "to better safeguard the privacy and security of Americans."

Schumer said the U.S. must address the rising threat from China on many fronts, notably the technology race. "If we don’t step up in a big and bold way, we risk missing out on a generation of good-paying jobs, millions and millions of them," he said.

Reporting by David Shepardson; editing by Richard Pullin

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