US senators outlined new legislation to further boost efforts around domestic semiconductor supply chains, with a proposal to hand home-grown and international companies tax credits to manufacture chips in the country.

In a statement, the US Senate Committee on Finance tabled legislation to create tax credits worth 25 per cent for investments in semiconductor production, covering manufacturing equipment and construction of relevant facilities.

Dubbed Facilitating American-Built Semiconductors, the bill builds on the government’s US Innovation and Competition Act unveiled last week, which aims to allocate $52 billion for domestic semiconductor manufacturing in addition to a separate $10 billion pot for a similar purpose.

The committee explained the share of global semiconductor production in the US had dropped from 37 per cent in 1990 to 12 per cent today, with the process increasingly concentrated overseas.

It said 75 per cent of global production was now in East Asia, with as much as 70 per cent of the cost difference for producing semiconductors overseas driven by subsidies.

Build at home
The committee’s chair Ron Wyden said the recent global chip shortage was affecting manufacturing of everything from computers to cars and it was imperative to boost domestic manufacturing.

“Our bill would provide a significant investment tax credit to companies that build chips here at home, rather than overseas,” he said. “The US can’t allow foreign governments to continue to lure companies’ manufacturing overseas, increasing risks to our economy and costing American workers good-paying jobs.”

The group did not provide an overall estimate on how much the measure would cost, but if approved it could benefit companies currently building chip plants in the US including NXP Semiconductor, Samsung, TSMC, and domestic companies Intel and Micron Technology.