U.S. Senators Propose 25% Tax Credit For Investments In Semiconductors - InvestingChannel

U.S. Senators Propose 25% Tax Credit For Investments In Semiconductors

A bipartisan group of U.S. senators is proposing a 25% tax credit for investments in semiconductor manufacturing as Congress works to increase U.S. microchip production.

The proposal sponsored by Senate Finance Committee Chairman Ron Wyden and the top Republican on the panel, Senator Mike Crapo, would provide “reasonable, targeted incentives for domestic semiconductor manufacturing,” they said in a written statement.

The group did not immediately provide a cost estimate for the measure, which is on top of recent proposed semiconductor funding.

Last week, the Senate approved $52 billion for production and research on semiconductors and telecommunications equipment. That included $2 billion dedicated to microchips used by automakers, which have seen massive shortages and led to significant production cuts.

Supporters of funding note that the U.S. share of semiconductors and microelectronics production has fallen to 12% from 37% in 1990. The senators said up to 70% of the cost difference for producing semiconductors overseas results from foreign subsidies.

U.S. Commerce Secretary Gina Raimondo said last month that the funding could result in seven to 10 new U.S. semiconductor plants.

Raimondo anticipates government funding would generate “$150 billion-plus” in investment in chip production and research, including contributions from state and federal governments and private-sector firms.

The tax credit could benefit Taiwan Semiconductor Manufacturing Co., (NASDAQ:TSMC) which is building a $12-billion semiconductor factory in Arizona and Dutch chipmaker NXP Semiconductors NV, as well as U.S. firms such as Intel (NASDAQ:INTC) and Micron Technology (NASDAQ:MU).

The Semiconductor Industry Association praised the proposal, saying it would “strengthen domestic chip production and research, which are critical to U.S. job creation, national defense, infrastructure, and semiconductor supply chains.”