U.S. bipartisan senators propose 25% tax credit for chip manufacturing

A bipartisan group of U.S. senators introduced a bill for a 25% tax credit for investments in manufacturing semiconductors.

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

The bill is the latest attempt by the U.S. government to increase chip production and domestic supplies in response to a worldwide shortage that has disrupted automobile and consumer electronics manufacturing.

Earlier this month, the Senate approved $52 billion funding for production and research on semiconductors and telecommunications equipment, aimed to compete with China in manufacturing microchips.

Among $52 billion funding, $2 billion is dedicated to semiconductors for automakers, as the industry made significant production cuts due to massive chip shortages.

“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.

Last month, U.S. Commerce Secretary Gina Raimondo said the $52 billion funding would help set up seven to ten new semiconductor plants in the U.S. and expect it to generate “$150 billion-plus” in chip production and research investment.

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

The tax credit would benefit Taiwan Semiconductor Manufacturing Co (TSMC), as the firm is building a $12 billion chip manufacturing facility in Arizona, and Dutch chipmaker NXP Semiconductors NV and U.S. firms such as Intel Corp and Micron Technology Inc.

Picture Credit: Forbes