U.S. senators propose 25% tax credit for semiconductor manufacturing

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

June 18, 2021 11:47 am | Updated 12:02 pm IST

A bipartisan group of U.S. senators proposed a 25% tax credit for investments in semiconductor manufacturing

A bipartisan group of U.S. senators proposed a 25% tax credit for investments in semiconductor manufacturing

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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.

Also Read | Chip shortage to cost automakers $110 bln in revenues in 2021

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.

Also Read | A billion for every chip-maker who 'makes in India'

"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 last month the funding could result in seven to 10 new U.S. semiconductor plants.

Raimondo anticipates government funding would generate "$150billion-plus" in investment in chip production and research -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), which is building a $12 billion semiconductor factory in Arizona , and Dutch chipmaker NXP Semiconductors NV as well as U.S. firms such as Intel Corp and Micron Technology Inc.

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