The Semiconductor Industry Association (SIA) today applauded the introduction in Congress of the Facilitating American-Built Semiconductors (FABS) Act, bipartisan legislation that would establish an investment tax credit to incentivize greater semiconductor manufacturing in the United States. The bill was introduced today by Sens. Ron Wyden (D-Ore.) and Mike Crapo (R-Idaho), the Chair and Ranking Member, respectively, of the Senate Finance Committee. Cosponsors include Sens. John Cornyn (R-Texas), Mark Warner (D-Va.), Steve Daines (R-Mont.), and Debbie Stabenow (D-Mich.). SIA represents 98 percent of the U.S. semiconductor industry by revenue.
On June 8, in a strong bipartisan vote, the Senate passed legislation called the U.S. Innovation and Competition Act (USICA) that includes $52 billion to fund the semiconductor manufacturing, design, and research provisions in the CHIPS for America Act. SIA has called on the House to follow suit and send legislation to the President’s desk for signature. A semiconductor investment tax credit is an important complement to the manufacturing incentives and research investments in USICA.
“Semiconductors form the foundation of the technologies that drive America’s economy, national security, and critical infrastructure,” said Bob Bruggeworth, President and CEO of Qorvo and 2021 SIA Board Chair. “Senate approval last week of funding for domestic chip production and innovation in USICA marked a significant step forward, and the FABS Act would build on that momentum and help ensure the U.S. can meet the strong global semiconductor demand and maintain leadership in critical technologies. We applaud Sens. Wyden, Crapo, and the bipartisan group of other Senate cosponsors for introducing this timely legislation. We hope the bill can be strengthened with the addition of an advanced research credit to ensure the U.S. is the global leader in both semiconductor design and manufacturing. We call on Congress to promptly pass this legislation, along with funding for the semiconductor manufacturing and research provisions of the CHIPS Act.”
The share of global semiconductor manufacturing capacity in the U.S. has decreased from 37% in 1990 to 12% today, according to a report by SIA and the Boston Consulting Group (BCG). This decline is largely due to substantial subsidies offered by the governments of our global competitors, placing the U.S. at a competitive disadvantage in attracting new construction of semiconductor manufacturing facilities, or “fabs.” Additionally, federal investment in semiconductor research has been flat as a share of GDP, while other governments have invested substantially in research initiatives to strengthen their own semiconductor capabilities, and existing U.S. tax incentives for R&D lag behind those of other countries. Furthermore, global semiconductor supply chain vulnerabilities have emerged in recent years that must be addressed through government investments in chip manufacturing and research, according to a separate SIA-BCG study.
Recognizing the critical role semiconductors play in America’s future, Congress in January enacted the CHIPS for America Act as part of the FY 2021 National Defense Authorization Act (NDAA). The law authorized incentives for domestic semiconductor manufacturing and investments in chip research, but funding must be provided to make these provisions a reality.
To complement the federal manufacturing grants and research investments authorized by the CHIPS Act, SIA has also called on leaders in Congress to enact an investment tax credit for semiconductor manufacturing and research. A combination of grants, tax credits, and research investments is needed to turbocharge U.S. semiconductor production and innovation.
“Boosting domestic chip manufacturing and research will keep America on top in semiconductors, which underpin the game-changing technologies of today and tomorrow,” said John Neuffer, SIA President and CEO. “We applaud Sens. Wyden, Crapo, Cornyn, Warner, Daines, and Stabenow for their leadership in introducing the FABS Act and look forward to working with Congress and the Biden administration to strengthen domestic chip production and research, which are critical to U.S. job creation, national defense, infrastructure, and semiconductor supply chains.”
