Warner introduces bipartisan bill to boost domestic semiconductor manufacturing

On June 18, 2021,  U.S. Sen. Mark R. Warner (D-VA), Chair of the Senate Select Committee on Intelligence and member of the Senate Finance Committee, joined his colleagues Sens. Ron Wyden (D-OR), Chair of the Senate Finance Committee, Mike Crapo (R-ID), Ranking Member of the Finance Committee, Debbie Stabenow (D-MI), John Cornyn (R-TX), and Steve Daines (R-MT), in introducing the Facilitating American-Built Semiconductors (FABS) Act to strengthen supply chains and create good-paying jobs in America by incentivizing domestic manufacturing of critical semiconductor technology.

“There’s bipartisan consensus that the U.S. must bolster investments in emerging technologies – like semiconductors – to be better positioned to compete against China’s tech dominance. However, the reality is that the U.S. heavily relies on semiconductor manufacturing abroad, which not only leaves our supply chains vulnerable, but it also means we’re offshoring too many good-paying jobs,” said Sen. Warner. “That’s why I joined my colleagues on this bipartisan bill, which will build on the record $52 billion investment included in the bipartisan United States Innovation and Competition Act, by incentivizing companies to bring these critical manufacturing facilities back to the U.S. in order to create more job opportunities in our communities and strengthen our national security.”

The share of global semiconductor production in the U.S. has dropped significantly, from 37 percent in 1990 to just 12 percent today. Semiconductor production is increasingly concentrated overseas, with 75 percent of global production now in East Asia. As much as 70 percent of the cost difference for producing semiconductors overseas is driven by foreign subsidies, rather than comparative advantages. The bill would help close that gap by incentivizing the production of semiconductors in the United States.

Specifically, the Facilitating American-Built Semiconductors (FABS) Act would create a 25 percent investment tax credit for investments in semiconductor manufacturing, both for manufacturing equipment and the construction of semiconductor manufacturing facilities. The proposal includes incentives for the manufacturing of semiconductors, as well as for the manufacturing of the specialized tooling equipment required in the semiconductor manufacturing process. Taxpayers could elect to receive the tax credit as a direct payment and must make this election before their facility or equipment is placed in service. To provide certainty and predictability for taxpayers, the credit would be permanent.

Earlier this month, the Senate passed the United States Innovation and Competition Act, which includes several Warner-led provisions to foster U.S. innovation and shore up American leadership in the microelectronics industry. The bill includes $52 billion to implement the CHIPS for America Act a bipartisan law championed by Sen. Warner – which called for a similar incentive tax credit included in the FABS Act – to help restore semiconductor manufacturing back to American soil. That legislation now awaits action by the House of Representatives.

A copy of the bill text can be found here. A one-page summary can be found here.