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​The US Senate will begin voting on legislation that is expected to boost the country’s semiconductor efforts in light of the global silicon shortages that have been causing supply disruptions and price increases over the last year or so.  The original bill, the “CHIPS for America Act (S.3933) contains a number of incentives to expand the country’s standing in the world semiconductor market, particularly in semiconductor production and metrology.  While the final form of the bill might differ after last minute negotiations and partisan politics, we summarize the bill below:

• Credits of 40% of the value of equipment placed in service before 2025 with the credit decreasing by 10% each year until the end of 2025 after which it disappears.  This includes any equipment, new construction, acquisition of equipment or upgrades that would incur depreciation or amortization including leases and lease extensions or renewals.
• Any property approved will receive a reduction in basis although new construction must be completed within 5 years.
• No credits or basis change will be issued for any equipment or items used outside of the US or in any way connected with the governments of China, Russia, Iran or North Korea.
• $10m/year will be allocated to advanced metrology for 3nm or above
• $10m/year will be allocated to metrology for security and supply chain verification (assumedly verifying imports and fakes)
• $30m/year will be allocated to developing a ‘manufacturing institute’ that will focus on research in virtualization and automation, advanced test, assembly, and packaging, and educational skills
• Various other ‘institutes’ will be developed and funded to foster ‘leadership’ in semiconductor R&D and packaging
• $50m/year will be allocated out of the DOD budget for R&D and development specifically for the semiconductor sector
• Innumerable studies, reports, and addresses to Congress, and the usual political ballyhoo will become part of the program’s oversight

Hopefully the $52b bill does not get watered down much further and if passed, does not get mired down in red tape when it comes to actual cash allocations, but at least it is a step in the right direction and one of the few that seems to have bi-partisan support, although with only 21 days left before the Senate summer holiday, much still needs to be done to make this a reality and considerable lobbying from special interests is still in play.  While the bill is certainly not perfect and we can already see dollars being spent for reports that only serve to justify the politics behind the bill, passing it before September would certainly be a plus and would give the US semiconductor space a longer-term boost toward regaining both manufacturing prowess and keeping semiconductor development ahead of the global competition.  Our focus is less on China and the like and more on Taiwan, South Korea and Japan where well established players can exert considerable semiconductor supply chain pressure and can maintain sometimes singular control over materials and equipment.  Perhaps by spending highly directed capital on the industry we can develop processes and technology that the US can utilize and/or lease to others under more favorable arrangements, but before any of that can happen, Congress has to actually pass the bill and allocate the funds.  They do work for us, right?