© dreamstime dimitios kaisaris Analysis | June 15, 2020
CHIPS for America Act to increase manufacturing in the U.S.
Facing a 50% decline in the U.S. share of global semiconductor manufacturing capacity over the past 20 years, the U.S. congress has introduced the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS for America Act), highlighted by a federal investment tax credit (ITC).
The bipartisan legislation would improve the competitiveness of semiconductor research, design and manufacturing in the United States, resulting in the creation of thousands of new jobs and bolstering national security, says SEMI which strongly supports the strategy. The Act’s 40% refundable federal ITC for semiconductor manufacturing facilities and equipment would quickly provide a significant, direct and transparent incentive to all companies investing in new and expanded semiconductor facilities in the United States. “Semiconductors are the foundation of all electronics and information technology, and this vital supply chain accounts for approximately 240,000 high-skill and high-wage jobs nationwide,” said Ajit Manocha, president and CEO of SEMI, in a press release. “SEMI members operate semiconductor supply chain facilities throughout the United States, with 25 states hosting at least one major facility. The ad-hoc incentive packages offered by some states have helped attract and sustain semiconductor manufacturing facilities, but individual governors and state economic development officials are often outmatched by whole-of-government initiatives from other nations. SEMI has long advocated for a tax credit to help level the playing field, and we strongly support the CHIPS for America Act to do so.” While U.S.-headquartered companies account for nearly half of global semiconductor sales and world-leading market share positions in semiconductor manufacturing equipment, design software, and key materials, only 12% of global semiconductor manufacturing capacity is located in the U.S. The availability of robust incentives in other countries and the lack of a federal U.S. incentive have been key factors driving the location of semiconductor manufacturing facilities overseas. The CHIPS for America Act would be a significant step forward for the federal government to create incentives and public investments to support the semiconductor industry in driving innovation across sectors throughout the economy.