Wyden, Crapo, Cornyn, Warner, Daines, Stabenow Introduce Bill to Boost Domestic Manufacturing of Semiconductors

Bill would create 25 percent investment tax credit

Washington, D.C. – Senate Finance Committee Chair Ron Wyden, D-Ore., and Ranking Member Mike Crapo, R-Idaho, today introduced legislation to strengthen U.S. semiconductor supply chains by incentivizing domestic manufacturing of this critical technology.

The Facilitating American-Built Semiconductors (FABS) Act is cosponsored by Senators John Cornyn, R-Texas, Mark Warner, D-Va., Steve Daines, R-Mont., and Debbie Stabenow, D-Mich.

The share of global semiconductor production in the United States has dropped from 37 percent in 1990 to just 12 percent today. Semiconductor production is increasingly concentrated overseas, with 75 percent of global production now in East Asia. As much as 70 percent of the cost difference for producing semiconductors overseas is driven by foreign subsidies, rather than comparative advantages. The senators’ bill would close that gap by incentivizing production of semiconductors in the United States.

“Chips are a critical technology in our economy, as recent supply chain disruptions and shortages have made crystal clear. The supply of everything from computers to cars is affected by these shortages, and the way to fix this problem is to bring chip manufacturing back to the United States,” Wyden said. “Our bill would provide a significant investment tax credit to companies that build chips here at home, rather than overseas. 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. We look forward to working with our colleagues to get this done.”

“Helping American semiconductor manufacturers strengthen their supply chains to better protect critical technologies is a longstanding bipartisan effort,” Crapo said. “Senators Cornyn and Warner have been strong leaders in the fight to stimulate domestic advanced chip manufacturing, and I appreciate their partnership in this effort. It is critical that we leverage federal government incentives to bolster American companies and bring chip and semiconductor manufacturing back to the United States. This tax incentive is a great step toward our goal of fortifying our supply chains, strengthening national security and boosting economic competitiveness.”

“As we’ve seen amidst the global semiconductor shortage, this supply chain is both absolutely essential and increasingly vulnerable,” Cornyn said. “This legislation would help us bring semiconductor manufacturing back to U.S. soil, secure future leadership in semiconductors, and stop China from winning the race to produce these chips.”

“There’s bipartisan consensus that the U.S. must bolster investments in emerging technologies – like semiconductors – to be better positioned to compete against China’s tech dominance. However, the reality is that the U.S. heavily relies on semiconductor manufacturing abroad, which not only leaves our supply chains vulnerable but it also means we’re outsourcing too many good-paying jobs,” Warner said. “That’s why I joined my colleagues on this bipartisan bill, which will build on the record $52 billion investment included in the bipartisan United States Innovation and Competition Act, by incentivizing companies to bring these critical manufacturing facilities back to the U.S. in order to create more job opportunities in our communities and strengthen our national security.”

“To be competitive in the 21st century, protect our national and economic security and win the race against China, we need to incentivize investment in the American companies making vital components like semiconductors, which power everything from our military to our phones Making this tax credit permanent will help Montana companies grow, create jobs and maintain America’s position as a global technological leader,” Daines said.

“The COVID-19 crisis highlighted weaknesses in our supply chain. For months, Michigan workers and manufacturers have experienced the harsh effects of the semiconductor chip shortage. Plants have been forced to shut down, and workers have been laid off. The good news is Republicans and Democrats came together and passed a significant investment to make semiconductor chips in the United States. Today, we continue that work. This new legislation will take an additional step in helping American manufacturers make semiconductor chips here at home so this shortage won’t happen again,” Stabenow said.

The legislation would create a 25 percent investment tax credit for investments in semiconductor manufacturing, both for manufacturing equipment and the construction of semiconductor manufacturing facilities. The proposal includes incentives for the manufacturing of semiconductors, as well as for the manufacturing of the specialized tooling equipment required in the semiconductor manufacturing process.

Taxpayers could elect to receive the tax credit as a direct payment, and must make this election before their facility or equipment is placed in service. To provide certainty and predictability for taxpayers, the credit would be permanent.

Text of the legislation is available here, and a one-page summary of the legislation is available here.

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