The US Senate, on May 27, voted to end debate on the $250 billion US Innovation and Competition Act of 2021 (USICA 2021) and moved nearer to a final vote on the legislation, Reuters reported.

Senators voted 68-30 for the USICA 2021 which challenges Beijing’s growing technological power by supporting US chipmakers and science research.

Once the 1,400 plus page bill is passed by the Senate, it will have to pass the House of Representatives to be sent to the White House for President Joe Biden to sign into law.

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The Innovation and Competition Act is key to President Joe Biden's infrastructure plans, the report mentioned.

What the USICA 2021 proposes

The USICA 2021 authorises about $190 billion to strengthen US technology in general and $54 billion specifically to increase the production of semiconductors, microchips, and telecommunication equipment.

The Act, when comes into effect, will significantly boost US semiconductor chip production and research on basic and advanced technology over the next five years to better compete with China.

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The proposal includes $49.5 billion in emergency supplemental appropriations to fund the chip provisions that were included in this year's National Defense Authorization Act, but which require a separate process to garner funding.

A summary of the bill said, "There is an urgent need for our economic and national security to provide funding to swiftly implement these critical programs. The Chinese Communist Party is aggressively investing over $150 billion in semiconductor manufacturing so they can control this key technology."

The legislation also seeks to counter Beijing's growing global influence through diplomacy, by working with allies and increasing US involvement in international organizations after former Republican President Donald Trump pulled Washington out as part of his "America First" agenda.

Republicans, Democrats unite

The vote is an indication of the US Congress increasingly seeking to take a tough line against China. The voting pattern indicates one of the few truly bipartisan sentiments in the deeply divided US Congress, which is narrowly controlled by Biden's Democrats.

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There are very few issues Democrats and Republicans agree on - supporting a bill aimed at challenging Beijing’s growing global influence is one of them. This comes as the US-China bilateral trade deficit has run more than $100 billion a year since 2002.

New regulations or reviews of investments and deals in China, could disrupt the future operations of US businesses in that country, including with respect to semiconductors and medical equipment.

Attract most advanced chip plants to US

A key goal of the funding is to bring the world’s most advanced chip plants to the United States, and only Taiwan Semiconductor Manufacturing Co and Korea’s Samsung Electronics Co have the technology to do that, Reuters report mentioned.

Any restrictions on subsidies to foreign companies would likely benefit Intel Corp, the long-time US chip-making giant that has promised to redouble its efforts in the most advanced technologies and spend more than $20 billion on new US plants. Intel last year moved to sell off its only chip factory in China to SK Hynix.

The US had a 37 percent share of semiconductors and microelectronics production in 1990 whereas at present only 12 percent of semiconductors are being manufactured in the United States.

(Edited by : Jomy Jos Pullokaran)