June 17, 2021
The bill would create a 25 percent investment tax credit
Washington DC – Mike Crapo (R-Idaho) and Senate Finance Committee Chairman Ron Wyden (D-Oregon) today introduced legislation to strengthen U.S. semiconductor supply chains by encouraging manufacturing national of this critical technology.
The Facilitating American-Built Semiconductors Act (FABS) Act is co-sponsored by Senators John Cornyn (R-Texas), Mark Warner (D-Virginia), Steve Daines (R-Montana) and Debbie Stabenow (D-Michigan).
The share of global semiconductor production in the United States has fallen from 37% in 1990 to just 12% today. Semiconductor production is increasingly concentrated abroad, with 75% of global production now in East Asia. Up to 70 percent of the cost difference for semiconductor production abroad is due to foreign subsidies rather than comparative advantages. The legislation would close this gap by encouraging the production of semiconductors in the United States.
“Helping US semiconductor manufacturers strengthen their supply chains to better protect critical technologies is a long-standing bipartisan effort. ” said Crapo. “Senators Cornyn and Warner have been strong leaders in the fight to boost domestic advanced chip manufacturing, and their partnership is essential in that effort. Leveraging federal government incentives to support American businesses and bring chip and semiconductor manufacturing back to the United States is essential. This tax incentive is a big step towards our goal of strengthening our supply chains, strengthening national security and boosting economic competitiveness.
“Chips are a vital technology in our economy, as the recent supply chain disruptions and shortages have made clear. The supply of everything from computers to cars is affected by these shortages, and the way to solve this problem is to bring chipmaking back to the United States, ” said Wyden. “Our bill would provide a significant investment tax credit to companies that make chips here at home, rather than overseas. The United States cannot allow foreign governments to continue to attract manufacturing companies overseas, increasing risks to our economy and costing American workers well-paying jobs. We look forward to working with our colleagues to achieve this.
Micron Technology, Inc. added, “Micron applauds the introduction of the FABS Act, legislation that would further promote US leadership in the semiconductor industry. Would these continued investments in America’s future further improve our country’s competitiveness globally, accelerate innovation, and strengthen technological leadership and economic growth in the United States? We appreciate the leadership efforts of President Wyden, Ranking Member Crapo, and Senators Cornyn, Warner, Daines and Stabenow to drive more innovation, manufacturing and R&D here in the United States and restore technological leadership. of America in such a vital industry.
The legislation would create a 25% investment tax credit for investments in semiconductor manufacturing, both for manufacturing equipment and the construction of semiconductor manufacturing facilities. The proposal includes incentives for semiconductor manufacturing, as well as for the manufacture of specialized tooling equipment required in the semiconductor manufacturing process.
Taxpayers could choose to receive the tax credit as a direct payment and must make this choice before their facility or equipment is put into service. To ensure certainty and predictability for taxpayers, the credit would be permanent.
The text of the legislation is available here, and a one-page summary of the legislation is available here.