US proposes 25% tax credit for chip making

June 21, 2021 // By Peter Clarke
US proposes 25% tax credit for chip making
A bi-partisan team of US politicians has introduced the Facilitating American-Built Semiconductors (FABS) Act into Congress. It would provide a strong incentive to increase chip manufacturing.

The 25 percent investment tax credit would be in addition to the US Innovation and Competition Act (USICA) that sets aside $52 billion to fund semiconductor manufacturing, design, and research provisions in the CHIPS for America Act . The US Senate passed USICA on June 8.

The estimated cost of the FABS Act to the US taxpayer was not given but it could have a dramatic effect bringing chip manufacturing to the US include the lower cost facilities for specialized processes and components such as MEMS.

The Semiconductor Industry Association (SIA) welcomed the FABS Act and called on Congress to send it to the US president for signature.

"Senate approval last week of funding for domestic chip production and innovation in USICA marked a significant step forward, and the FABS Act would build on that momentum and help ensure the US can meet the strong global semiconductor demand and maintain leadership in critical technologies," said Bob Bruggeworth, CEO of Qorvo and 2021 chair of the board of directors of the SIA, in a statement.

The SIA argued that US chare of global semiconductor manufacturing capacity had fallen from 37 percent in 1990 to 12 percent in 2021 largely due to subsidies offered by governments that place the US at a competitive disadvantage.

"A combination of grants, tax credits, and research investments is needed to turbocharge US semiconductor production and innovation, the SIA said.

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