SIA Endorses FABS Act Introduced in House

Estimated reading time: 2 minutes

The Semiconductor Industry Association (SIA) applauded introduction in the House of Representatives of the Facilitating American-Built Semiconductors (FABS) Act, bipartisan legislation that would establish an investment tax credit to incentivize semiconductor manufacturing, design, and research in the United States. The bill was introduced today by Reps. McCaul (R-Texas) and Matsui (D-Calif.). Original co-sponsors include Reps. Mike Kelly (R-Pa.), DelBene (D-Wash.), Stefanik (R-N.Y.), Kildee (D-Mich.), Katko (R-N.Y.), Slotkin (D-Mich.), and Meijer (R-Mich.). Similar legislation (S. 2107) was introduced in the Senate by Finance Committee Chair Wyden (D-Oreg.), Ranking Member Crapo (R-Idaho), and other bipartisan co-sponsors.

“Semiconductors form the nerve center of America’s economy and national security, and incentivizing domestic chip research, design, and manufacturing is a national priority,” said John Neuffer, SIA president and CEO. “The FABS Act introduced today would incentivize semiconductor companies to manufacture and design more of the chips our country needs on U.S. shores, spurring private investments and creating American jobs. We strongly support enactment of the House bill and appreciate its inclusion of a credit for both manufacturing and design to help bolster the chip ecosystem in the United States. Coupled with funding the CHIPS Act, enactment of a tax credit for semiconductor manufacturing and design as set forth in the House’s FABS Act are parts of a complementary, holistic strategy, and both are needed to produce robust, predictable, and durable incentives to restore U.S. semiconductor leadership. We applaud all the bill co-sponsors for their leadership on this issue and urge leaders in Congress to swiftly enact the bill and fund the semiconductor manufacturing incentives and research provisions in the CHIPS Act.”

The bill is another indication Congress is prioritizing incentives to strengthen the semiconductor industry in the U.S. A similar bipartisan investment tax credit bill was introduced in the Senate on June 17, 2021. Additionally, on Feb. 4, 2022, the House passed critical CHIPS Act investments totaling $52 billion to strengthen domestic semiconductor manufacturing and research as part of competitiveness legislation, the America COMPETES Act of 2022. The Senate passed the same level of funding for the CHIPS Act as part of its version of competitiveness legislation, the United States Competition and Innovation Act (USICA), in June 2021. House and Senate leaders must now work on reconciling differences in the bills and passing bipartisan legislation to be signed by the president. A semiconductor investment tax credit, as called for by the FABS Act, is an important complement to the manufacturing incentives and research investments in USICA and America COMPETES.

The share of modern semiconductor manufacturing capacity located in the U.S. has decreased from 37% in 1990 to 12% today. This decline is largely due to substantial manufacturing incentives 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 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 an SIA-BCG study.

A combination of grants, tax credits, and research investments is needed to turbocharge U.S. semiconductor production and innovation. Enacting a strengthened FABS Act and funding the CHIPS Act are essential components of this holistic, complementary approach to strengthening America’s semiconductor capabilities over the long term.