First, what is CHIPS?
The CHIPS Act stands for Creating Helpful Incentives to Produce Semiconductors for America. This proposed refundable investment tax credit encourages domestic semiconductor manufacturing and has already gained bipartisan support.
Who are the key players?
Senator John Cornyn, a senior member of the Senate Finance Committee, heads a group of bipartisan lawmakers from the House and Senate in the pursuit of this refundable credit. There have been discussion within Congress to include the CHIPS Act in pandemic response legislation.
What are the potential benefits?
- 40% refundable investment tax for qualified semiconductor equipment and manufacturing facility expenditures through 2024
- Tax credit reduction rates of 30% for qualified semiconductor equipment expenditures in 2024 and 2026
- Tax credit reduction rates of 20% for qualified manufacturing facility expenditures in 2025 and 2026
- Federal grants for state and local governments to cover incentive costs and support the manufacturing and research of semiconductors
What does this mean for Chipmakers?
It’s great news! Chipmakers will have support in 5G wireless network pursuits as well as the ability to stay competitive within the global technology landscape. We will see what comes out of the proposed Act in the next few months.