The bill, which envisages setting aside a sum of US$22 billion for various initiatives, was drafted by Senator John Cormyn, a Republican from Texas, and Mark Warner, a Democrat who is vice-chairman of the Senate Select Committee on Intelligence. It was to be introduced in the House of Representatives on Thursday.
In a statement, Cormyn said while the US led the world in chip design, most of the actual hardware was manufactured outside America.
He said the bill — titled Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act — "would help stimulate advanced semiconductor manufacturing capabilities domestically, secure the supply chain, and ensure US maintains our lead in design while creating jobs, lowering our reliance on other countries for advanced chip fabrication, and strengthening national security".
Huawei was placed on a US blacklist a year ago that prevented it from buying American products that had more than 25% of local content. But it was able to get past this obstacle by obtaining American products from branches of US companies outside the country.
Last month, the Commerce Department made changes in the country's Foreign Direct Product Rule which places some goods made abroad under US regulations if they are based on American technology or software, or made using American equipment.
The same day that this announcement was made, Taiwan Semiconductor Manufacturing Company, the biggest contract chip maker in the world, said it would be setting up a plant in Arizona at a cost estimated to be about US$12 billion.
The bill put forward by Cormyn and Warner aims to:
Create a 40% investment tax credit for qualified semiconductor equipment (placed in service) or any qualified semiconductor manufacturing facility investment expenditures through 2024. It gets reduced to 30% in 2025, 20% in 2026, and phases out in 2027.
Ask the commerce secretary to create a US$10 billion federal match program that matches state and local incentives offered to a company for building semiconductor fabs with advanced manufacturing capabilities.
Create a new NIST Semiconductor Program to support advanced manufacturing in America.
Authorise funds for the Defence Department to carry out research, development, workforce training, test, and evaluation for programs, projects, and activities in connection with semiconductor technologies and direct a plan to use the Defence Production Act Title III funding to set up a domestic semiconductor production capability.
Asks the commerce secretary to submit a report in 90 days to assess the capabilities of the US. industrial base to support national defence.
Creates new R&D streams to ensure US leadership in semiconductor technology and innovation is critical to growth and national security:
- US$2 billion to implement the Electronics Resurgence Initiative of the Defence Advanced Research Projects Agency;
- US$3 billion to implement semiconductor basic research programs at the National Science Foundation;
- US$2 billion to implement semiconductor basic research programs at the Department of Energy; and
- US$5 billion to establish an Advanced Packaging National Manufacturing Institute under the Department of Commerce to establish US. leadership in advanced microelectronic packaging.