Business, Industry

U.S. Senators Propose 25% Tax Credit for Semiconductor Manufacturing

U.S. Senators Propose 25% Tax Credit for Semiconductor Manufacturing

A bipartisan group of U.S. senators on Thursday proposed a 25% tax credit for investments in semiconductor manufacturing as Congress works to increaseU.S. chip production.

The proposal sponsored by Senate Finance Committee Chairman Ron Wyden and the top Republican Senator Mike Crapo along with four other senators would provide “reasonable, targeted incentives for domestic semiconductor manufacturing,” they said in a statement.

The group did not immediately respond to a request for a cost estimate for the measure, which is on top of recent semiconductor funding. Last week, the Senate approved $52 billion for production and research on semiconductors and telecommunications equipment. That included $2 billion dedicated to chips used by automakers, which have seen massive shortages and made significant production cuts.

Supporters of funding note the U.S. share of semiconductors and microelectronics production has fallen to 12% from 37% in1990.

The senators said up to 70% of the cost difference for producing semiconductors overseas results from foreign subsidies.

“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,” Wyden said.

U.S. Commerce Secretary Gina Raimondo said that the funding could result in seven to 10 new U.S. semiconductor plants last month.

Raimondo anticipates that government funding would generate “$150billion-plus” in chip production and research investments, including contributions from state and federal governments and private-sector firms.

“We just need the federal money … to unlock private capital,” Raimondo said.

The tax credit could benefit Taiwan Semiconductor Manufacturing Co (TSMC), building a $12 billion semiconductor factory in Arizona, and Dutch chipmaker NXP Semiconductors NV and U.S. firms such as Intel Corp and Micron Technology Inc.

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