A bipartisan group of lawmakers on Wednesday introduced a bill to provide more than $22.8 billion in aid for semiconductor manufacturers to “restore semiconductor manufacturing back to American soil.”

The Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act would increase federal incentives to stimulate advanced chip manufacturing, enable cutting-edge research and development, secure the supply chain and bring greater transparency to the microelectronics ecosystem, create American jobs, and ensure long-term national security.

The bill was introduced by Sen. Mark R. Warner (D-VA), Vice Chairman of the Senate Select Committee on Intelligence, and Sen. John Cornyn (R-TX).

The CHIPS For America Act:

  • Creates a 40-percent refundable ITC for qualified semiconductor equipment (placed in service) or any qualified semiconductor manufacturing facility investment expenditures through 2024. The ITC is reduced to 30 percent in 2025, 20 percent in 2026, and phases out in 2027.
  • Directs the Secretary of Commerce to create a $10 billion federal match program that matches state and local incentives offered to a company for the purposes of building a semiconductor foundry with advanced manufacturing capabilities.
  • Creates a new NIST Semiconductor Program to support advanced manufacturing in America. The program’s funds will also support STEM workforce development, ecosystem clustering, U.S. 5G leadership, and advanced assembly and test.
  • Authorizes funding for DOD to execute research, development, workforce training, test, and evaluation for programs, projects, and activities in connection with semiconductor technologies and direct the implementation of a plan to utilize Defense Production Act Title III funding to establish and enhance a domestic semiconductor production capability.
  • Requires the Secretary of Commerce to complete a report within 90 days to assess the capabilities of the U.S. industrial base to support the national defense in light of the global nature of the supply chain and significant interdependencies between the U.S. industrial base and that of foreign countries as it relates to microelectronics.
  • Establishes a trust fund in the amount of $750M over ten years to be allocated upon reaching an agreement with foreign government partners to participate in a consortium in order to promote consistency in policies related to microelectronics, greater transparency in microelectronic supply chains, and greater alignment in policies towards non-market economies. To incentivize multilateral participation, a common funding mechanism is established to use this fund to support the development of secure microelectronics and secure microelectronics supply chains. A report to Congress is required for each year funding is available.
  • Directs the President to establish, through the National Science and Technology Council, a Subcommittee on Semiconductor Leadership responsible for the development of a national semiconductor research strategy to ensure U.S. leadership in semiconductor technology and innovation, which is critical to American economic growth and national security, and to coordinate semiconductor research and development.
  • Creates new R&D streams to ensure U.S. leadership in semiconductor technology and innovation is critical to American economic growth and national security:
    • $2 billion to implement the Electronics Resurgence Initiative of the Defense Advanced Research Projects Agency.
    • $3 billion to implement semiconductor basic research programs at the National Science Foundation.
    • $2 billion to implement semiconductor basic research programs at the Department of Energy.
    • $5 billion to establish an Advanced Packaging National Manufacturing Institute under the Department of Commerce to establish U.S. leadership in advanced microelectronic packaging and, in coordination with the private sector, to promote standards development, foster private-public partnerships, create R&D programs to advance technology, create an investment fund ($500M) to support domestic advanced microelectronic packaging ecosystem, and work with the Secretary of Labor on establishing workforce training programs and apprenticeships in advanced microelectronic packaging capabilities.
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While some U.S. firms such as Intel Corp and Micron Technology Inc still make chips in the United States, the industry’s center of gravity has shifted to Asia, where Taiwan Semiconductor Manufacturing Co (TSMC) has more than half of the overall market for contract manufacturing chips and an even stronger hold on the most advanced chips.

“America’s innovation in semiconductors undergirds our entire innovation economy, driving the advances we see in autonomous vehicles, supercomputing, augmented reality, IoT devices and more. Unfortunately, our complacency has allowed our competitors – including adversaries – to catch up,” said Warner.

This bill reinvests in this national priority, providing targeted tax incentives for advanced manufacturing in the US, funding basic research in microelectronics, and emphasizing the need for multilateral engagement with our allies in bringing greater transparency and attention to security and integrity threats to the global supply chain,” he added.

“This legislation would help stimulate advanced semiconductor manufacturing capabilities domestically, secure the supply chain, and ensure U.S. maintains our lead in design while creating jobs, lowering our reliance on other countries for advanced chip fabrication, and strengthening national security,” said Cornyn.