New legislation introduced by Sens. Ron Wyden, D-Ore., and Mike Crapo, R-Idaho, would create a 25 percent tax credit for investments in U.S. semiconductor manufacturing to boost domestic manufacturing of semiconductors and further the aims of a major push in Congress to stimulate domestic growth in that sector.

Introduction of the Facilitating American-Built Semiconductors (FABS) Act follows passage by the Senate earlier this month of the U.S. Innovation and Competition Act (USICA) of 2021, championed by Senate Majority Leader Chuck Schumer, D-N.Y.

That bill, formerly known as the Endless Frontier Act, aims to counter rising technological competition from China, and directs more than $50 billion of new tech-related research to the National Science Foundation (NSF), along with $52 billion of funding to support domestic semiconductor operations.

The push in Congress to open the spigot on those and other funding fronts will be one of the underlying themes of MerITocracy 2021 American Innovation Forum in November. The Forum will gather Capitol Hill and White House leadership, along with industry visionaries, for creative thinking at the nexus of policy and technology to help solve some of the largest problems facing the United States.

Semiconductor Manufacturing Stimulus

In 1990, the United States claimed a 37 percent share the global semiconductor production, but today that number has dropped to 12 percent. The FABS Act hopes to close that gap and serve as an incentive to increase the domestic production of semiconductors.

“Helping American semiconductor manufacturers strengthen their supply chains to better protect critical technologies is a longstanding bipartisan effort,” Sen. Crapo said in a press release. “Leveraging Federal government incentives to bolster American companies and bring chip and semiconductor manufacturing back to the United States is critical. This tax incentive is a great step toward our goal of fortifying our supply chains, strengthening national security, and boosting economic competitiveness.”

Investments in both semiconductor manufacturing equipment and the construction of semiconductor manufacturing facilities would qualify for the 25 percent investment tax credit, according to the release. Companies could then decide to receive the tax credit as a direct payment, but must do so before their equipment or facility is placed in service.

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“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,” said Sen. Wyden. “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.”

Sens. John Cornyn, R-Texas, Mark Warner, D-Va., Steve Daines, R-Mont., and Debbie Stabenow, D-Mich., are cosponsors of the bill.

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Grace Dille
Grace Dille
Grace Dille is MeriTalk's Assistant Managing Editor covering the intersection of government and technology.