TAIPEI (Taiwan News) — The U.S. Senate voted to proceed on a trimmed-down version of a bill that would offer billions of dollars in subsidies and tax credits to the semiconductor industry on Tuesday (July 19).

The Senate held a procedural vote with 64 in favor and 34 against, which means the Senate and House could pass the legislation by the end of next week, Reuters reported. The legislation has been billed by lawmakers as vital in Washington’s push to compete with China and in easing supply chain issues.

Ahead of the vote, Senate Majority Leader Chuck Schumer was cited by Nikkei as saying the bill “will fight inflation, boost American manufacturing, ease our supply chains, and protect American security interests.” Schumer added “America will fall behind in so many areas if we don’t pass this bill. We could very well lose our ranking as the No. 1 economy and innovator in the world.”

“This is not a free market situation,” Nikkei cited Sen. Rob Portman as saying Tuesday. “If the market decides, and China is offering US$150 billion — which they are over the next ten years — when Europe has its own equivalent legislation to ours and is offering tens of billions of dollars or tens of billions of euros, or when South Korea or when Japan or when Taiwan are offering these huge incentives, it’s very difficult to see us being able to bring these chips back to America,” Portman noted.

While the final text of the bill was not made public before the procedural vote, Senate aides told Reuters the legislation includes around US$54 billion (NT$1.61 trillion) in subsidies for U.S. semiconductor firms, in addition to a new, four-year 25% tax credit to get chipmakers to build plants in America. The tax credit is estimated to be worth around US$24 billion.

Chipmakers from Asia and the U.S. have said that they would delay or cut U.S. investment if the overdue legislation failed to be passed. Taiwan Semiconductor Manufacturing Co. said the speed of construction for its US$12 billion fab in Phoenix would be dependent on American subsidies, while Taiwan’s GlobalWafers Co. said it would only consider moving forward on a new US$5 billion plant in Sherman, Texas if it was able to secure subsidies.

Meanwhile, Intel postponed the start of construction for a US$20 billion chip facility in Ohio that was slated to break ground on July 22 over the stalled legislation, Nikkei said.

The CHIPS Act (Creating Helpful Incentives to Produce Semiconductors for America Act) was put forth in June 2020 and signed into law as part of the national defense act in January 2021, according to Nikkei. However, lawmakers were not able to secure funding for CHIPS.

In June 2021, the Senate then passed its own version of the CHIPS Act as part of another bill aimed at broadly bolstering U.S. competitiveness, per Nikkei. Earlier this year, House Democrats introduced their own version of an American competitiveness bill, called the America COMPETES Act, which also included funding for the CHIPS Act.

Since then, lawmakers from the Senate and House have been trying to reconcile the different CHIPS Act versions to come to a consensus on broad outlines and the amount of funding required, Nikkei noted.