chips act offers incentives for us semiconductor manufacturing

2025-07-01 general

Washington, Tuesday, 1 July 2025.
the chips act of 2022 aims to boost domestic semiconductor manufacturing. it provides taxpayer-friendly incentives for companies like nvidia, tsmc and asml. these companies are expanding operations in the united states. the final regulations clarify the application process for accessing $52 billion in funding. the advanced manufacturing investment credit equals 25% of the basis of any qualified property placed in service during a tax year in an advanced manufacturing facility. the funding could significantly reduce financial burdens and improve roi for expansion projects.

Tax incentives for advanced manufacturing

The final regulations clarify the Advanced Manufacturing Investment Credit (AMIC) under Section 48D [1]. Taxpayers can increase qualified investment for progress expenditures after August 9, 2022 [1]. The AMIC equals 25% of the basis of qualified property placed into service during the tax year at an advanced manufacturing facility [1]. An advanced manufacturing facility is one where the primary purpose is manufacturing semiconductors or semiconductor manufacturing equipment [1]. The AMIC does not apply to property for which construction begins after December 31, 2026 [1].

Expanded definition of semiconductor manufacturing

The final regulations expand the definition of ‘semiconductor manufacturing’ to include ‘semiconductor wafer production,’ which includes the production of solar wafers [1]. This expansion aims to bolster supply chain and national security [1]. Semiconductor packaging now includes ‘assembly’ and ‘testing’ [1]. ‘Assembly’ encompasses wafer-dicing, die-bonding, wire bonding, solder bumping, and encapsulation [1]. ‘Testing’ includes probing, screening, and burn–in work [1]. These clarifications are consistent with the purpose of incentivizing domestic semiconductor manufacturing [1].

Investment landscape and strategic considerations

Semiconductor reshoring in the U.S. is a tangible result of U.S.-China tech decoupling [7]. The CHIPS and Science Act of 2022 is central to the U.S. bid to regain semiconductor dominance [7]. By mid-2025, $33.7 billion in grants and $5.85 billion in loans were disbursed to 32 companies, with $8.3 billion more for research and development [7]. Major projects are underway, including Intel’s $7.86 billion Ohio facility and TSMC’s Arizona complex, which is expanding to $165 billion [7]. TSMC is on track to produce 4 nm chips in Arizona by mid-2025 [7].

Market reactions and global tax dynamics

TSMC stock experienced strong performance on July 1, 2025 [6]. Investors closely monitor TSMC, a major player in the semiconductor industry [6]. G7 nations have agreed to a ‘side-by-side’ system to shield U.S. companies from certain provisions of the global minimum tax, averting a potential global tax war [3]. This agreement allows U.S. domestic and foreign profits to be excluded from the global minimum tax [3]. As part of the deal, other G7 members will support the U.S. position in negotiations with the G20 and OECD [3].

Uncertainties and countervailing forces

The Trump administration’s renegotiation of terms adds uncertainty to the semiconductor landscape [7]. A $540 billion spending spree could lead to oversupply [7]. The rescission of the AI Diffusion Rule by the Trump administration introduces further policy shifts [2]. This rule, initially released during the Biden administration, was rescinded on May 13, 2025 [2]. The move reflects ongoing adjustments in the regulatory environment affecting the semiconductor and technology sectors [2].

Bronnen

CHIPS Act Semiconductors