Congress has left most of the semiconductor industry’s legislative priorities unfinished even as chip shortages continue to buffet global supply chains for a number of key industries. However, supporting the industry remains among the most bipartisan issues in Washington. Autumn promises to be a busy season of policy developments on a host of issues that could significantly help – or harm – the chip industry in the United States.
One of the first orders of business for Congress when it returns in September should be to fund the CHIPS for America Act programs, which were authorized earlier this year in the fiscal year 2021 National Defense Authorization Act (NDAA). In April, the White House Supply Chain Report called for $52 billion in semiconductor incentives and research funding. In June, the Senate passed the United States Innovation and Competition Act (USICA), which included emergency appropriations of $39 billion to fund the incentive grant program at the Commerce Department, $12 billion for semiconductor research programs, and $2 billion for the CHIPS for America Defense Fund.
The House has yet to act, and the programs remain unfunded. SEMI encourages the House to move quickly to pass funding for these programs and ensure the Commerce Department’s incentive program is available to new and expanded facilities to produce semiconductor manufacturing equipment and materials, as called for in the White House Supply Chain Report.
Additionally, SEMI strongly supports and encourages Congress to pass the Facilitating American-Built Semiconductors (FABS) Act. The legislation would create a permanent and effectively refundable 25% tax credit for equipment and facilities to produce semiconductors and semiconductor tools. This bipartisan measure introduced by Senate Finance Committee Chairman Wyden, Ranking Member Crapo and other Senators June and continues to encourage the introduction of a companion measure in the House of Representatives. Both chambers should work quickly to pass this legislation to provide a permanent, predictable and transparent incentive to strengthen the U.S. semiconductor manufacturing supply chain.
Finally, as Congress explores changes to the U.S. corporate tax code, it should maintain the foreign-derived intangible income (FDII) deduction that helps make U.S. semiconductor manufacturing more competitive globally and encourages intangible assets such as intellectual property be kept within the U.S. tax base.
In 2020, SEMI members claimed more than $1 billion in FDII deductions that support research, manufacturing and job creation. A globally competitive corporate tax code is a key driver of innovation and economic growth. Maintaining the current FDII deduction and repealing the requirement to amortize research expenses before it takes effect in 2022 will help ensure semiconductor innovation and manufacturing are not impaired by changes to the tax code.
While policymakers in Congress and the Biden administration have made progress to implement policies that will help grow and strengthen the U.S. semiconductor industry, much work remains to be done. SEMI looks forward to continuing to engage policymakers to help achieve our shared goal of a strong, resilient U.S. semiconductor supply chain.
Geoffrey Lane is director of Public Policy at SEMI.