Lawmakers propose 25 percent tax credit to incentivize domestic chip production

The Facilitating American-Built Semiconductors Act has bipartisan support.

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A group of bipartisan lawmakers on the Senate Finance Committee have introduced legislation that seeks to incentivize chipmakers to manufacture their silicon in the US. Sponsored by panel chairman Ron Wyden of Oregon and ranking Republican Mike Crapo of Idaho, among others on the committee, the Facilitating American-Built Semiconductors Act would provide companies with a 25 percent tax credit when they invest in domestic semiconductor manufacturing equipment and facilities.

According to the panel, as much as 70 percent of the cost advantage overseas chip foundries offer come on the back of foreign subsidies. The proposed subsidy would be in addition to the $52 billion the Senate earmarked last week as part of the US Innovation and Competition Act. Since the start of the pandemic, chip shortages have affected a variety of different companies, including automakers that have had to cut vehicle production in some instances.

"The United States can’t allow foreign governments to continue to lure companies’ manufacturing overseas, increasing risks to our economy and costing American workers good-paying jobs," Senator Wyden said.

According to Reuters, the tax credit would primarily benefit Taiwan’s TSMC, which is building a $12 billion plant in Arizona. It would also help US chipmakers like Intel and Micron Technology. The former announced a $20 billion plan in April to build two factories in Arizona. The panel has yet to share an estimate on how much the bill will cost taxpayers.