The US senate has voted to move ahead with a slimmed-down version of legislation to provide subsidies and tax credits worth billions of dollars for the semiconductor industry.

The move is intended to ease shortages of chips that have disrupted production across a broad range of different industries.

The bill forms part of a broader effort by the US government to tackle Chinese competition and to ease ongoing supply-chain problems, as well as reducing the economy’s reliance on foreign-made semiconductors.

According to Senate aides the measure will include around $54 billion in subsidies for US semiconductor companies, as well as a new, four-year 25% tax credit to encourage companies to build plants in the United States. The tax credit Is thought to be worth about $24 billion.

The decision to advance CHIPS Act funding is seen as strengthening the competitiveness of semiconductor chip manufacturing in America and has been welcomed by the industry.

“The vote is an important, necessary and welcome milestone in an effort to develop and enact policies that strengthen US high-tech manufacturing competitiveness, economic and national security, and create high-paying semiconductor manufacturing jobs in America,” said Dr. Thomas Caulfield, president and CEO of GF. “The past two years have clearly shown how vitally important chips are to American consumers, businesses and the economic health of our nation, both today and in the future.”

However, Caulfield went on to a call on lawmakers to make, “a final push so that we can grow chip manufacturing in the US.”

Back in January Intel said that it would spend $20 billion on a factory in Ohio after breaking ground on two new plants in Arizona last year, and that it would look to grow that investment to $100 billion with eight total fabrication plants

Intel Chief Executive Pat Gelsinger had warned that without government funding, "it's just not going to happen as fast and it's not going to grow as big as quickly."

The bill as it currently stands is a pared-down version of rival measures in the Senate and House that have stalled before becoming law.

Commenting on the news Scott White, CEO at PragmatIC Semiconductor, welcomed the announcement.

It is heartening to hear about the US Senate advancing the CHIPS Act which has the potential to incentivise and transform the US semiconductor industry," White said. He went on to compare the US move with developments here in the UK.

"Although the UK is inching forward in developing its own strategy, the needle needs to move quicker if we are to capitalise on our existing skillset and technological capabilities."

He did say, however, that with the right support, the UK could once again become a global powerhouse in key sectors of semiconductor manufacturing.