house bill aims to boost us chip manufacturing with tax credit increase
Washington, Friday, 2 May 2025.
The Semiconductor Industry Association (SIA) is backing a new House bill designed to revitalize U.S. chip manufacturing. The proposed legislation, known as the BASIC Act, seeks to increase the Advanced Manufacturing Investment Credit (AMIC) from 25% to 35%. The bill also aims to extend the credit for ten years and broaden its scope to include chip research and design. This initiative follows previous announcements of over 100 new semiconductor projects, representing $540 billion in private investments across 28 states, and is projected to create over half a million jobs.
impact on semiconductor companies
The proposed increase in the AMIC rate from 25% to 35% represents a 40 percent increase, which could significantly reduce the tax burden on semiconductor manufacturers, encouraging further domestic investment [1]. John Neuffer, President and CEO of the SIA, emphasized that the BASIC Act is a welcome effort to strengthen the proven driver of investment, spurring continued investment in America’s growing ecosystem [1]. This incentive, combined with the expansion of the credit to include chip R&D and design, is viewed as critical to America’s competitiveness and sustained technology leadership [1]. From an investor standpoint, this translates to potentially higher profitability and increased attractiveness of U.S.-based semiconductor firms.
broader market implications
Semiconductors are vital to various sectors, including automotive, mobile communication, and artificial intelligence [3]. Increased domestic chip production could mitigate supply chain vulnerabilities, which have caused disruptions across industries [4]. The U.S. share of global chip production declined from 40% in the 1990s to 12% in 2021, highlighting the need for revitalization efforts [4]. Government incentives, like the BASIC Act, aim to reverse this trend, making the U.S. a more competitive player in the global semiconductor market. This initiative aligns with broader efforts to reduce reliance on foreign chip manufacturers and bolster national security [GPT].
global initiatives and competition
The U.S. is not alone in its pursuit to strengthen its semiconductor industry. The European Union has also outlined a €43 billion package to address chip shortages [4]. Malaysia is investing over $250 million in Arm Limited to develop its own semiconductor ecosystem, focusing on AI chips [5]. TSMC (Taiwan Semiconductor Manufacturing Company) recently debuted its A14 technology, showcasing advancements in logic process technology [7]. These global initiatives underscore the intense competition in the semiconductor industry and the strategic importance of government support to foster innovation and growth. Investors should monitor these international developments to gauge the long-term prospects of U.S. semiconductor companies.
potential challenges and considerations
While the BASIC Act and other initiatives are promising, establishing a self-sufficient local semiconductor supply chain is a complex and costly undertaking. A 2021 SIA report estimated that it could take a decade, cost a trillion dollars, and increase semiconductor prices by up to 65% [4]. George Calhoun, Director at the Stevens Institute of Technology, describes the semiconductor industry as an incredibly complicated global ecosystem [4]. Investors should consider these challenges and the long-term nature of these investments when evaluating the potential impact on semiconductor stock values [GPT].