Lawmakers propose billions to boost U.S. semiconductor manufacturing and research
Proposal calls chip production and design vital to U.S. economic and national security
By Jeanne Whalen
June 10, 2020
Concerned that too much semiconductor manufacturing and know-how has shifted overseas, a bipartisan group of lawmakers is proposing allocating tens of billions of dollars to boost production and development in the United States.
The legislation comes amid heightened tensions [1] between the United States and China, which are prompting all levels of government and industry to consider new measures to protect U.S. economic competitiveness and national security in high-tech fields.
A bill [2] introduced by Sens. John Cornyn (R-Tex.) and Mark R. Warner (D-Va.) would create a tax credit that investors could use to deduct from their taxes 40 percent of the cost of building a U.S. semiconductor factory or buying semiconductor manufacturing equipment.
Chip manufacturing plants are among the most expensive kinds of manufacturing facilities to build, costing $10 billion or more.
The legislation would also create a $10 billion federal fund to match incentives offered by state and local governments for construction of semiconductor plants.
And it would dedicate $12 billion to semiconductor research at various federal agencies.
"Semiconductors underpin nearly all innovation today and are critical to U.S. communications and defense computing capabilities. While Texas has been a leader in manufacturing this technology and the U.S. leads the world in chip design, most of those chips are manufactured outside the United States," Cornyn said.
"America's innovation in semiconductors undergirds our entire innovation economy, driving the advances we see in autonomous vehicles, supercomputing, augmented reality, IoT (Internet of Things) devices and more. Unfortunately, our complacency has allowed our competitors -- including adversaries -- to catch up. This bill reinvests in this national priority," Sen. Warner said. [3]
Reps. Doris Matsui (D-Calif.) and Michael McCaul (R-Tex.) plan to introduce the legislation in the House on Thursday, they said in a statement.
U.S. semiconductor companies account for 47 percent of global chip sales but only 12 percent of manufacturing, according to the Semiconductor Industry Association, which welcomed the new legislation. China is investing heavily in chip production and is rapidly gaining ground, the association said.
"As global competitors invest big to attract advanced semiconductor manufacturing to their shores, the U.S. must get in the game and make our country a more competitive place to produce this strategically important technology," SIA President John Neuffer said.
Eric Sayers, a consultant at Beacon Global Strategies, called the legislation significant. "This group includes prominent conservatives who have traditionally been reluctant to see the federal government play a role in the free market," he said. "These senators are saying this industry is critical to national security and we need a robust approach to compete with an authoritarian capitalist China that is funneling billions into their own industry."
The legislation follows news [4] last month that a large Taiwanese chip manufacturer plans [5] to build a $12 billion factory in Arizona that would create 1,600 jobs. Both the company, TSMC, and Commerce Secretary Wilbur Ross described the investment as critical to reinforcing U.S. high-tech manufacturing.
Ellen Nakashima contributed to this report.
[2] https://www.cornyn.senate.gov/node/5599
[4] https://www.washingtonpost.com/business/2020/05/15/us-closes-huawei-loophole/
[5] https://www.tsmc.com/tsmcdotcom/PRListingNewsAction.do?action=detail&language=E&newsid=THGOANPGTH