CHIPS for America Act Aims to Boost Semiconductor Industry

A bipartisan group of senators has introduced a new piece of legislation to jumpstart more semiconductor growth in the U.S. The long-term strategy is to establish a reliable advanced manufacturing ecosystem capable of sustaining itself domestically and competing globally. 

 

Image courtesy of Semiconductor Industry Association.

 

The CHIPS for America Act (short for Creating Helpful Incentives to Produce Semiconductors for America Act) will allocate $22 billion towards R&D and the creation of advanced manufacturing facilities across the U.S. 

According to the bill, $10 billion in federal funds would contribute to a state and local incentive matching program for companies moving to the U.S. The package will also offer a federal investment tax credit for semiconductor equipment and facility investments. The credit will be refundable by 40% until 2024, then reduced to 30% through 2025 and decreasing every year thereafter. 

Another $12 billion is earmarked toward research and development efforts, with $2 billion toward the Electronics Resurgence Initiative of the Defense Advanced Research Projects Agency (DARPA), $3 billion to National Science Foundation semiconductor research programs, $2 billion to Department of Energy programs, and $5 billion for an Advanced Packaging National Manufacturing Institute focused on advanced microelectronic packaging. 

The package will also include a $750 million trust fund supporting collaboration between foreign partners on expanding their microelectronics supply chains. 

Through the legislation, the Trump administration would establish a subcommittee of its National Science and Technology Council focused exclusively on leading the U.S.’s semiconductor industry expansion strategy. 

The bill comes as the COVID-19 pandemic has exacerbated the U.S.’s reliance on foreign supply chains. Bipartisan committees are motivated to reel in the country’s manufacturing base back to domestic operations and to incentivize newer companies to establish their manufacturing capacity in the U.S. early on. 

The sector’s leading trade associations, SEMI and the Semiconductor Industry Association, both voiced support for the legislation. SEMI commented that the federal incentive package provides a “whole-of-government” solution that helps level U.S. companies in different states to compete internationally. 

The Semiconductor Industry Association’s statement also echoed this sentiment, stating, “Significant semiconductor manufacturing incentives have been put in place by other countries, and U.S. semiconductor manufacturing growth lags behind these countries due largely to a lack of federal incentives.” 

Both groups said the federal incentives model will help spur growth on a national level.