US plans $28 bn incentive to semiconductor manufacturers

A bipartisan group of U.S. lawmakers has introduced a bill to provide more than $22.8 billion in aid for semiconductor manufacturers, aiming to boost the construction of chip factories in America, Reuters reported.
Semiconductor revenueChip factories can cost up to $15 billion to build, with much of the expense in the form of costly tools. The proposal would create a 40 percent refundable income tax credit for semiconductor equipment, $10 billion in federal funds to match state incentives to build factories, and $12 billion in research and development funding.

It would authorize the Defense Department to use funding under the Defense Production Act to “establish and enhance a domestic semiconductor production capability.” While a network of “trusted foundries” exists in the United States to help supply chips to the U.S. government, many chips must still be sourced from Asia.

Senators John Cornyn, a Texas Republican, and Mark Warner, a Virginia Democrat, introduced the bill in the Senate. Aides to Representatives Michael McCaul, a Texas Republican, and Doris Matsui, a California Democrat, said the two planned to introduce a version in the U.S. House of Representatives on Thursday.

Some U.S. firms such as Intel and Micron Technology make chips in the United States. But Asia is the hub of semiconductor industry. Taiwan Semiconductor Manufacturing (TSMC) has more than half of the overall market for contract manufacturing chips and an even stronger hold on the most advanced chips. TSMC last month said it plans to build a factory in Arizona.

Firms, including iPhone maker Apple, Qualcomm and Nvidia rely on TSMC and other Asian foundries to manufacture their chips.