Senate legislation proposed to create tax credit for US semiconductor manufacturing

Senate lawmakers have introduced bipartisan legislation that would establish an investment tax credit for domestic semiconductor manufacturing.

The bill was introduced Thursday by Sens. Ron Wyden, D-Ore., and Mike Crapo, R-Idaho, and follows the passing vote earlier this month by Senate lawmakers to pass the U.S. Innovation and Competition Act (USICA), which includes $52 billion in funding provision for semiconductor manufacturing, design and research.

Called the Facilitating American-Built Semiconductors (FABS) Act, the legislation is the latest measure proposed in response to rising concerns about the technological dominance of China and supply chain weakness.

In January, Congress enacted the CHIPS for America Act as part of the fiscal 2021 National Defense Authorization Act (NDAA), which authorizes incentives for domestic semiconductor manufacturing and investments in chip research. Since then, industry groups, including the Semiconductor Industry Association, have called on leaders in Congress to enact an investment tax credit, such as the measures included in the legislation introduced on Thursday.

According to research by the SIA and Boston Consulting Group, the share of global semiconductor manufacturing in the U.S. decreased from 39% in 1990 to 12% today. Among factors cited as driving the decline in market share are tax incentives issued by governments of other countries.

Commenting on the move, SIA president and CEO John Neuffer said: “Boosting domestic chip manufacturing and research will keep America on top in semiconductors, which underpin the game-changing technologies of today and tomorrow.”

Neuffer called chip production and research “critical to U.S. job creation, national defense, infrastructure, and semiconductor supply chains.”