Bill investing billions in semiconductors, needed badly by auto industry, passed in Senate

The U.S. Senate on Tuesday voted 68-32 in favor of legislation intended to battle back against overseas competition, especially a growing threat from China, including investing more than $50 billion into the making of semiconductors, a product badly needed by the auto industry.

The legislation also includes $2 billion in specific investments in older generation semiconductors used in automaking and takes additional steps to push federal government agencies to purchase American-made products in contracts. 

Passage of the legislation had been expected after Democrats and Republicans largely came together two weeks ago to cut off debate and move it to the U.S. House, where final passage is all but assured. The Senate held off on a final vote until after the Memorial Day work period holiday to give Sen. John Cornyn, R-Texas, a vote on an amendment that would strip out a provision guaranteeing workers are paid prevailing wages for the localities in which the work is done.

That provision to guarantee prevailing wages, backed by Sens. Gary Peters and Debbie Stabenow, both D-Mich., is seen as helping labor unions since it ensures in areas where they provide much of the work, government investment cannot undercut their wages. Cornyn argued the provision was unnecessary since workers in the semiconductor industry are already well paid.

His attempt to strip it out failed by a vote of 42-58.

Stabenow and Peters both played key roles in the crafting and passage of the legislation, even though the investment in semiconductor manufacturing won’t immediately help the auto industry in Michigan.

Demand created by the COVID-19 pandemic for semiconductors used in personal electronics, combined with a slowdown in the manufacture of those for other products, such as autos, caused by plant closures, resulted in a shortage that has crippled the industry.

With a huge portion of the semiconductors used in automaking and other products manufactured overseas, especially in Asia, the funding is expected to be targeted to opening chip fabrication foundries in the U.S. and reducing the likelihood of a similar shortage in the future.

Stabenow and Peters, meanwhile, have been pushing the "Make It In America" part of the bill for years and are finally on the verge of winning its approval.

It would clamp down on waivers that allow U.S. government agencies to skirt rules for requiring contracts pay for American-made products, creating a specific office to review whether those waivers should be allowed and requiring they be publicly documented. Agencies also would have to consider whether an award to a company helps improve employment in the U.S. .