US Proposes Bill To Subsidize Semiconductor Manufacturing: Will It End Chip Shortage?

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Recently, the US House of Representatives passed the America COMPETES Act of 2022. Alongside other measures, the 2,900-page bill has also allocated $52 billion in grants to subsidize semiconductor manufacturing. For R&D purposes, the bill has authorized almost $300 billion.

 

US bill

If the bill becomes an act, it would be the country's biggest attempt to compete with China's current industrial and technological supremacy. However, as per The New York Times report, the bill is unlikely to be passed in its current state. Much of it is because of the ideological differences between how Republicans and Democrats believe the federal government can best position the nation to lock horns with China.

Both Parties Need To Agree
 

Both Parties Need To Agree

Republicans believe the legislation has a lot of extraneous provisions to address climate change. For example, it sets aside $8 billion in contributions to the Green Climate Fund, a Paris Agreement initiative to back developing nations deal with climate change. Republicans also say the legislation doesn't hold China accountable for a lot of things.

However, both parties are on the same page when it comes to supporting local chip production. When Intel announced it was working on creating a $20 billion semiconductor fabrication plant in Ohio, the company said it would eventually shell out around $100 billion in the facility over the course of 10 years if Congress approves additional support for the industry.

Low Domestic Production A Security Issue

Low Domestic Production A Security Issue

According to a Bloomberg report, President Joe Biden believes the lack of domestic chip production is a security issue. Global semiconductor shortage is also a reason for the inflating prices in recent months.

With the bill's passing, it depends on the House and Senate to negotiate a fair agreement. The legislation is required to pass both chambers before President Biden can make it a law. Joe Biden also urged Congress to get it done as soon as possible.

"I look forward to the House and Senate quickly coming together to find a path forward and putting a bill on my desk as soon as possible for my signature," President Biden said in a statement. "America can't afford to wait."

2022 Could Be Good For Semiconductors

2022 Could Be Good For Semiconductors

With the entry of Intel into the chip-making business, 2022 could witness seamless supply chains. While the company makes many GPUs, Arc Alchemist will be the first slot-in desktop GPU focused on gaming. The cards will soon be launched but the company is yet to share details about its performance, so it's likely Intel will showcase it at CES.

While many people would want the GPU prices to go down, the market isn't stable at the moment. Prices came down for a while in the middle of 2021, giving hopes that the GPU shortage was finally coming to an end. But at the end of the year, prices surged again.

However, there are signs that GPU supply will ramp up this year. Nvidia recently said that it expects the GPU shortage to cap off halfway through 2022. Intel's CEO also said something similar, saying the shortage could improve this year, which will result in a seamless supply next year.

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