South Dakota Sen. John Thune says the CHIPS and Science Act included too much government spending to gain his support. The $280 billion package was signed into law Aug. 9. It authorizes over $50 billion to support semiconductor manufacturing and research, and over $100 billion for science research and education programs.
"There's an argument to be made that we need to stand up a domestic capability when it comes to semiconductors," Thune, a Republican, told the Sioux Falls Chamber of Commerce on Tuesday.
Proponents of the CHIPS Act argue it would increase U.S. competitiveness and decrease the country's reliance on Taiwan and China, where much of the world's chipmaking capacity is consolidated. Thune said he was interested in the idea of a tax credit for U.S. chip manufacturers. However, he disagreed with the inclusion of direct subsidies in the legislation, arguing support for the industry should be an “either-or proposition.”
“There’s going to be a lot of companies out there that are taking direct money from the federal government, and a 25% tax credit on the back end,” he said.
In addition to $52.7 billion for semiconductor subsidies, the law also authorizes $102 billion for science and engineering programs at the Department of Energy and National Science Foundation. Some Republicans supported those additions, arguing they’re necessary to boost competitiveness with China. But Thune said the extra spending wasn’t paid for, solidifying his opposition to the package.
“It got another couple hundred billion dollars added to it in authorizations, mainly for a lot of new government agencies, programs, etc.,“ Thune said. "As much as I could have probably stomached the first $50 billion or so that was directly going to semiconductor chips, it was the next $100 billion on top of that.”
Thune, who serves as Senate minority whip, said he supports the overall goal of the legislation.
“Hopefully it has the desired effect of creating a domestic semiconductor chip industry,” he said. “The argument was, ‘Is there a better way to do it, a right way to do it, a way where you would actually try figure out how to pay for it.’”