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The Semiconductor Industry Association (SIA) applauded the inclusion in the reconciliation package of a modified version of the Facilitating American-Built Semiconductors (FABS) Act, legislation to provide an investment tax credit to incentivize semiconductor manufacturing in the United States. The text was included in the tax portion of the reconciliation package, which is expected to be voted on soon. SIA represents 98 percent of the U.S. semiconductor industry by revenue and nearly two-thirds of non-U.S. chip firms.
“Semiconductors are essential to the technologies that power America’s economy, national security, critical infrastructure, and global competitiveness,” said Bob Bruggeworth, president and CEO of Qorvo and 2021 SIA board chair. “The investment tax credit for semiconductor manufacturing would help keep America on top in this foundational technology and strengthen U.S. chip supply chains by boosting domestic semiconductor production and innovation. We commend Chairman Wyden for his leadership in advancing the investment tax credit for semiconductor manufacturing and including it in the reconciliation package, and we look forward to seeing this provision enacted.”
The FABS Act is one of two major legislative efforts Congress is considering to strengthen the semiconductor industry in the U.S. 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, as called for by the FABS Act, is an important complement to the manufacturing incentives and research investments in the CHIPS Act.
“Strengthening domestic semiconductor manufacturing, research, and design is a national priority, and the time for action is now,” said John Neuffer, SIA president and CEO. “We stand ready to work with U.S. policymakers to expand and enact the FABS Act and to fully fund the CHIPS Act to turbocharge American leadership in the game-changing technologies of today and tomorrow. Given the importance of American leadership in the entire value chain, we also look forward to working in the future to strengthen the FABS Act to encompass both semiconductor design and manufacturing.”
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. Funding the CHIPS Act, along with enactment of a strengthened FABS Act, are complementary efforts and will help enhance the global competitiveness of the U.S. semiconductor industry.