WASHINGTON—President Biden’s expansive infrastructure proposal includes $50 billion for the American semiconductor industry. The funding will go toward production incentives and research and design, say administration officials.

Biden’s plan, released last week, seeks to leverage bipartisan support on Capitol Hill to subsidize domestic manufacturing and chip research. The president's $2 trillion infrastructure plan would be paid for by raising the corporate tax rate to 28 percent from 21 percent and increasing taxes on companies’ foreign earnings.

Biden has broad bipartisan support for aiding the semiconductor industry, including from Republican lawmakers who say China is spending heavily to build its own chip-making capacity, threatening the U.S. lead in advanced chip technology. Some media outlets have reported that companies that produce chip-making equipment would be well positioned to benefit, and spending on grid modernization, broadband infrastructure, and incentives for electric vehicles will drive demand for chips.

This plan comes on the heels of a global shortage of semiconductor chips that have had a serious impact on the automotive industry. However, this plan won’t bring relief in the short term. By the time any new semiconductor fabrication plants get built and qualified, the current shortage will likely have passed.