The House narrowly passed a bill Friday that would invest billions of dollars to entice semiconductor chip manufacturers to set up shop in the United States, kick off a range of cybersecurity focused programs at federal agencies and shore up U.S. technology innovation to compete with industries in China and other countries.
The America COMPETES Act passed the House 2022-210 on a narrow party line, with Democrat Stephanie Murphy, D-Fla., voting against, and Rep. Adam Kinzinger, R-Ill., voting in favor. Rep. Eddie Bernice Johnson, D-Texas, is chair of the House Science, Space and Technology Committee and lead sponsor of the House bill.
In floor comments, Johnson, who is retiring from Congress at the end of the year, said the proposed legislation would “usher in an exciting and prosperous future for American competitiveness” that would bolster semiconductor manufacturing, technology research and development, national security, climate health and other areas.
“In short, we are acting to address the critical needs identified by the scientific community, industry, academia, and other stakeholders as what they need most to succeed in the 21st century,” Johnson said.
The bill would set aside more than $50 billion in federal funds through 2026 to subsidize the domestic manufacturing of semiconductor computer processor chips, which have become critical to operating major parts of society, from computers and smart phones to automobiles, robotics and weapons systems. It will also establish a new fund to provide for “international information and communications technology security and semiconductor supply chain activities, including to support the development and adoption of secure and trusted telecommunications technologies, secure semiconductors, secure semiconductors supply chains, and other emerging technologies,” according a House Rules Committee breakdown.
For years, policymakers have fretted about potential disparities in the semiconductor supply chain, but a global shortage of processor chips has highlighted just how dependent many industries, products and services are on the technology. Now, it’s clear that beyond cybersecurity concerns, this approach can leave the U.S. and other countries in a weak position during times of significant supply chain disruption.
Taiwan is the world’s leading manufacturer of computer processing chips, accounting for more than 60% of the $83.5 billion global foundry market. Much of that comes from a single business, Taiwan Semiconductor Manufacturing Company, which accounted for 54% of total foundry revenue last year and is relied on by U.S. tech behemoths like Apple, Qualcomm and others.
China is the world's dominant provider of rare metals and minerals — vital components to the production of most modern technologies, including computer chips. Such minerals are actually prevalent around the world, but China is one of the only countries that has built a robust industrial production base to process and refine those materials.
COMPETES would tweak a number of authorities that empower the National Institute for Standards and Technology to offer cybersecurity expertise and guidance around a range of issues. The agency would be directed to create new security guidance on the private and open source software supply chain and digital identity management, expand research around quantum computing and artificial intelligence and help U.S. universities protect their sensitive research from cyberespionage.
Through the bill the National Science Foundation would also establish a data initiative to measure the cybersecurity workforce as both governments and industries deal with a shortage of qualified cybersecurity employees and often find themselves competing for the same talent.
It directs the Secretary of Commerce to provide “outreach and technical assistance” for small communications network providers and promote the use of Open Radio Access Networks and other open networks. For years, U.S. officials have openly worried that smaller and rural telecommunications companies lack trusted domestic manufacturers of telecommunications equipment as well as funds, sometimes relying on cheaper equipment from Chinese companies like Huawei. Under the bill, Commerce would have one year to develop and submit a plan to Congress analyzing gaps and shortfalls in the United States information and communications technology supply chain and codifies the Communications and Security Advisory Council that advises the Federal Communications Commission.
Secretary of Commerce Gina Raimondo hailed the bill's passage and called on the Senate and House to work out differences as soon as possible to address chip shortages and signal to industry that the U.S. is open for business.
"We need federal funding to address this shortage because we cannot stimulate American manufacturing without it. Companies will build their facilities in countries that are creating incentives—even if those countries aren’t the US—if we fail to pass this funding now," Raimondo said. "Companies like Samsung and Intel have indicated that their investments are predicated on passage of this chips funding. In the case of Intel, they’ve been very clear that their $20 billion investment could turn into investments of $100 billion. But only if we pass the funding for the CHIPs Act."
Representative Bennie Thompson, D-Miss., who chairs the House Homeland Security Committee, predicted COMPETES would "reduce our dependence on foreign countries by incentivizing more U.S. manufacturing of critical goods and technology," as well as "improve supply chain security" and boost domestic production of homeland security equipment and supplies.
The passage marks a win for a White House that has otherwise struggled to move much of its agenda through a bitterly divided Congress. After a Senate version of the bill was passed last year, House leaders put their own version on the backburner as they tried (and failed) to pass the Build Back Better Act. Late in 2021, members began indicating that the House would move on some version of the bill early in the new year, and the Biden administration began aggressively stumping for the COMPETES Act as a means to combat a number of pressing issues, from semiconductor supply chain shortages to bolstering the nation's STEM and cybersecurity talent pool.
The Senate version of the proposed legislation, which contains a number of differences with the House bill, passed the Senate 68-32 last year. House Republicans voted almost universally against it as their Minority Leader Kevin McCarthy, R-Calif., and others claimed the bill would "hurt" U.S. competitiveness and "reward" China.
An amendment by Rep. Andy Levin, D-Mich., to create a new “secure and privacy protected data system” for postsecondary students was approved an added to the bill.