U.S. lawmakers propose 25% tax credit to incentivize chip production

A bipartisan group of lawmakers on the U.S. Senate Finance Committee has introduced legislation aimed at providing incentives for chipmakers to make chips in the United States. Sponsored by panel Chairman Ron Wyden of Oregon and Republican Mike Crapo of Idaho, along with other members of the committee, the Promote American Manufacturing of Semiconductors Act would provide companies with a 25 percent tax credit when they invest in domestic semiconductor manufacturing equipment and facilities.

As much as 70 percent of the cost advantage offered by overseas chip foundries allegedly comes from foreign subsidies. The proposed subsidies would be in addition to the $52 billion designated by the Senate last week as part of the American Innovation and Competition Act. The chip shortage has affected a variety of different companies since the pandemic began, including automakers that in some cases have had to cut back on vehicle production.

The United States cannot allow foreign governments to continue to attract companies to manufacturing overseas, which increases the risk to our economy and costs American workers good-paying jobs,” Sen. Wyden said. “

The tax credit would mostly benefit Taiwan’s TSMC, which is building a $12 billion plant in Arizona, Reuters reported. It will also help U.S. chipmakers such as Intel and Micron Technology, the former of which announced a $20 billion plan in April to build two plants in Arizona.