US introduces act to add tax credits for chip designers, extends credits for chip production, too

News
By
published

This act could encourage chip designers to expand in the U.S.

US Capitol Building
(Image credit: 10302144 / Pixabay)

The Semiconductor Industry Association (SIA) is applauding the U.S. House of Representative’s introduction of the bipartisan Semiconductor Technology Advancement and Research (STAR) Act which extends Section 48D of the CHIPS and Science Act, or the Advanced Manufacturing Investment Credit (AMIC). According to the SIA Press Release, AMIC gives an eligible taxpayer a tax credit of up to 25% of a qualified investment in an advanced manufacturing facility for semiconductors and semiconductor manufacturing equipment, but it expires by 2026. However, the STAR Act extends this and expands it to also include investments in semiconductor design.

“The CHIPS Act’s investment tax credit has been hugely successful in strengthening America’s semiconductor ecosystem, spurring substantial private investment and helping to put the U.S. on track to more than triple domestic chip manufacturing capacity by 2032, the largest percentage increase in the world. By extending the duration of the credit, the STAR Act would build on this moment by promoting further growth in chip manufacturing here in the United States,” the SIA said in its statement. It also added, “By expanding coverage of the credit to include chip design, the STAR Act would ensure the U.S. secures the economic, national security, and first-mover advantages of being the global leader in semiconductor technology.”

This CHIPS and Science Act is credited for reviving America’s semiconductor industry, with the country spending more on chip manufacturing in 2024 than in the past 28 years combined. However, it was also criticized for not going far enough in chip research and development—for example, Applied Materials was denied a $4-billion grant for its proposed R&D center in Sunnyvale, California. The STAR Act, if approved, would help remedy this, allowing research-intensive chip designs like Arm, AMD, and Nvidia do to be covered by federal investments.

There has been some uncertainty in the past weeks, especially with President Trump criticizing the CHIPS and Science Act during his second campaign. This led to several chipmakers racing for federal funding before his January inauguration. However, it seems that the Trump administration will back at least some of the previous government’s semiconductor investment strategy, giving American chipmakers some hope that they can still continue their expansion plans. Aside from that, the STAR Act’s bipartisan endorsement signals broader support for additional expansion of the U.S.’s investments in semiconductors.

The former U.S. Commerce Secretary, Gina Raimondo, has called for CHIPS Act 2, saying that American chip makers need funds to build more fabs. So, if the STAR Act passes through Congress and the Senate and gets signed into law, it gives hope for a second CHIPS and Science Act-like that will further expand American investment into semiconductors.

Jowi Morales
Jowi Morales
Contributing Writer

Jowi Morales is a tech enthusiast with years of experience working in the industry. He’s been writing with several tech publications since 2021, where he’s been interested in tech hardware and consumer electronics.

11 Comments Comment from the forums
  • bit_user
    It's all well and good to have chip design subsidies, but there is no scarcity either of chip designers or design centers, in the US. Where we have a critical shortage is in fab capacity and upstream supply chain. So, if you've only got a limited amount to spend on it, focusing that spending on the critical shortage is the smarter thing to do.

    BTW, tax breaks are government spending by a different name. Anything which contributes to the budget deficit is effectively government spending.
    Reply
  • why_wolf
    Chip design is something the US already completely dominates. Total cash handout.
    Reply
  • DS426
    bit_user said:
    ...

    BTW, tax breaks are government spending by a different name. Anything which contributes to the budget deficit is effectively government spending.
    Absolutely, and the federal government have used tax breaks for decades to mold and shape things in the direction they want things to go. EV tax credits are another great example. It's just a funny approach as -- just as you said -- it's less revenue later in favor of not paying upfront (although the CHIPS Act does include direct payments and government loans as well); a calculated interest savings on federal debt?

    As for the CHIPS Act and President Trump, IMO, he favors American manufacturing strongly enough that he wouldn't try to make any major changes to it, and if anything, would extend it similar to this STAR Act.
    Reply
  • ezst036
    Another wonderful day for the lobbyists!
    Reply
  • OldAnalogWorld
    Unfortunately, the right policy will not lead to a rapid reduction in prices, which will inevitably rise due to new customs duties for China and other countries.

    Customs duties should encourage the purchase of goods from local producers, equalizing the prices of their goods and foreign ones by subsidizing end consumers, not companies - only buyers have the right to decide which goods are really of the highest quality and which are not, which best meet their needs, and not Uncle Sam and the pseudo-capitalists sponsored by them, receiving non-market subsidies, they are a road to nowhere. Subsidies encourage corruption and a decline in the productivity of management and personnel and reduce competition in the market in reality.

    Companies should work in market conditions within the country, as a minimum, since globally this becomes impossible due to massive subsidies everywhere.

    I read that the Chinese authorities have started subsidizing mass demand. This is the right decision, but not by printing money, but by collecting customs duties from foreign producers. And the US and Europe should do the same. And then subsidies to local producers focused on exports to high-margin countries will lose their meaning - duties will eat up all the increased margin on high-paying clients in developed countries. And China will lose, because its society is less solvent for obvious reasons.
    15-20 years and it will all be over for China. The rebuilt US, together with its key allies, just needs to stoically survive this period of deteriorating living standards for ordinary people, which needs to be explained to them as thoroughly as possible in advance, which none of the populists want to do now, and this leads to sad consequences...
    Reply
  • mikerahl
    It will be important for countries such as Canada (currently being attacked and having been attacked repeatedly by the US) to lock the US out of our raw materials that might be used for such manufacturing in the US since it won't benefit Canada in any way shape or form to be a supplier of those raw inputs. Instead, Canada should nationalize US corporate held tech patents and use them to build our own chip industry. The US is attacking Canada left and right of late, as well as constantly threatening to annex the country. Time to respond by locking the US out of all our raw minerals. Should put a damper in Trump's plans to harm everyone outside the US
    Reply
  • OldAnalogWorld
    I don't know about Mexico, it's a much less developed society with a different mentality than the US-Canada, but it's definitely more profitable for Canada to become a US state than to try to argue with them. You don't have a chance, you're too small in population (and consumers), you won't survive in the new dark world order.
    I previously advocated that rather than feud with China over Taiwan, it would be easier to move all 5-7 million of the most developed population of the island to the US/Canada along with their families (this is several times less than all the illegal immigration to the US/Сanada over the past 10 years - only in this case, people with lower intellectual development most often end up in the US), which would only greatly increase the potential of North America. And leave Taiwan empty to China - let it do what it wants with its destroyed industry and without its human capital. In the end, people are more valuable than territory, especially developed people, and they should be lured to the country first and foremost. This is what the US has risen on for 250 years - the arrival of the most passionate layers and many scientists/engineers from all countries where they were not valued and there were less free societies.
    Reply
  • mikerahl
    OldAnalogWorld said:
    I don't know about Mexico, it's a much less developed society with a different mentality than the US-Canada, but it's definitely more profitable for Canada to become a US state than to try to argue with them. You don't have a chance, you're too small in population (and consumers), you won't survive in the new dark world order.
    I previously advocated that rather than feud with China over Taiwan, it would be easier to move all 5-7 million of the most developed population of the island to the US/Canada along with their families (this is several times less than all the illegal immigration to the US/Сanada over the past 10 years - only in this case, people with lower intellectual development most often end up in the US), which would only greatly increase the potential of North America. And leave Taiwan empty to China - let it do what it wants with its destroyed industry and without its human capital. In the end, people are more valuable than territory, especially developed people, and they should be lured to the country first and foremost. This is what the US has risen on for 250 years - the arrival of the most passionate layers and many scientists/engineers from all countries where they were not valued and there were less free societies.
    Canada would never be admitted as a state, it would become a territory to abuse,, just like Puerto Rico. To ensure this does not happen, Canada needs to pull out of alliances with the US (not difficult, the US is doing it for us), withdraw support for the US dollar, and move to a neutral posture, being equally supportive of the BRICS block as we are of the US.
    Reply
  • bit_user
    DS426 said:
    As for the CHIPS Act and President Trump, IMO, he favors American manufacturing strongly enough that he wouldn't try to make any major changes to it,
    That's not what he said.
    "He also argued that government grants like the CHIPS Act are unnecessary and counterproductive and that companies should use their own resources to build fabs rather than rely on public funding."

    Source: https://www.tomshardware.com/tech-industry/trump-to-impose-25-percent-100-percent-tariffs-on-taiwan-made-chips-impacting-tsmc
    He does like tax cuts, though. Maybe STAR is an attempt to get something through to slightly blunt the impact of CHIPS getting repealed.
    Reply
  • bit_user
    mikerahl said:
    Canada would never be admitted as a state, it would become a territory to abuse,, just like Puerto Rico.
    Stop worrying about that. It's not a serious threat. It's just meant to intimidate Canada, ahead of trade talks. Also, these over-the-top statements serve a role in distracting public attention from other things that are actually happening.

    P.S. I like Canada. Whatever happens, I wish the best for you guys.
    Reply