May 9, 2022

Acts Would Help Secure Supply Chains for Vital Components

With computer component shortages ongoing, there has been a renewed call for Congress to create funding for investments and incentives to support U.S. semiconductor manufacturing, research and development, and supply chain security.

The Creating Helpful incentives for the Production of Semiconductors (CHIPS) for America Act would provide an income tax credit for semiconductor equipment or manufacturing facility investment through 2026. Additionally, it would establish a trust fund to be allocated upon reaching an agreement with foreign government partners to promote:

  • Consistency in policies related to microelectronics
  • Transparency in microelectronic supply chains
  • Alignment in policies toward nonmarket economies

The CHIPS Act was originally introduced in 2020 and was eventually included as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2021. However, the NDAA did not include any funding for CHIPS that year, and legislators are still debating bills that would provide appropriations for the program.

Business groups are also advocating for an enhanced Facilitating American-Built Semiconductors (FABS) Act, which was introduced in March, 2022. FABS would establish a semiconductor investment tax credits to incentivize semiconductor manufacturing, design and research in the United States.

According to the Semiconductor Industry Association, “By funding the CHIPS Act and expanding and enacting the FABS Act, leaders in Washington can usher in a historic resurgence of chip manufacturing in America, strengthen our country’s most critical industries, boost domestic chip research and design, and help ensure the U.S. leads in the crucial, chip-enabled technologies that will define America’s strength for decades to come.”

The U.S. Chamber of Commerce and trade associations, including FEDA, signed a letter to legislators last week urging them to approve funding for the programs. “Approval of funding provisions would help meet this long-term challenge by incentivizing semiconductor research, design, and manufacturing in the United States. This will in turn strengthen the U.S. economy, national security, and supply chain resilience and increase the supply of chips so important to our entire economy,” the letter stated.