The Advanced Manufacturing Investment Credit Will Spur American Job Growth, Fuel Innovation, and Strengthen U.S. Semiconductor Supply Chains
WASHINGTON – Today, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released final rules for the Advanced Manufacturing Investment Credit (CHIPS ITC) created in the Biden-Harris Administration’s CHIPS and Science Act. President Biden and Vice President Harris championed the CHIPS and Science Act, a key component of the Administration’s Investing in America agenda, to usher in a new era of semiconductor manufacturing in the United States, bringing with it a revitalized domestic supply chain, good-paying jobs, and investments in the industries of the future.
Part of the Biden-Harris Administration’s economic agenda, the guidance released today gives taxpayers the clarity needed to continue making and finalizing investments in U.S. semiconductor manufacturing and semiconductor manufacturing equipment. These investments will help strengthen American supply chains, spur job growth, and catalyze innovation in the technologies of the future.
The CHIPS ITC is generally equal to 25% of the basis of any qualified property that is part of an eligible taxpayer’s advanced manufacturing facility if the qualified property is placed in service after December 31, 2022, and covers construction occurring after the enactment of the CHIPS and Science Act on August 9, 2022.
“The Biden-Harris Administration’s economic agenda is onshoring semiconductor manufacturing and driving U.S. innovation in this critical industry,” said Secretary of the Treasury Janet L. Yellen. “Semiconductors are vital to ensuring a stable supply of low-cost consumer goods and our investments continue to strengthen those supply chains, create good-paying jobs, and safeguard our national security.”
“Today represents an important milestone in the implementation of President Biden and Vice President Harris’ historic CHIPS and Science Act,” said U.S. Secretary of Commerce Gina Raimondo. “The Advanced Manufacturing Investment Tax Credit, when paired with CHIPS direct funding and loans, provides a comprehensive set of federal incentives to drive the significant investment in semiconductor manufacturing capacity occurring in the United States important to meeting our national and economic security needs.”
“Today’s final guidance provides critical certainty for semiconductor and solar manufacturers to make generational investments in communities across the country,” said National Economic Advisor Lael Brainard. “Semiconductor investments are supporting over 125,000 jobs and will ensure that the United States leads the world in advanced manufacturing not just for the next few years, but for the next few decades.”
The CHIPS ITC is strengthening the resilience of the semiconductor supply chain and creating good-paying American jobs by incentivizing investments in U.S. facilities that manufacture semiconductors (including wafer production) or semiconductor manufacturing equipment. The CHIPS ITC, along with the $39 billion in CHIPS for America funding administered by the U.S. Department of Commerce (Commerce), is an integral part of the suite of incentives to achieve the Biden-Harris Administration’s economic and national security goals.
Treasury and Commerce have coordinated closely to make sure these incentives – including the national security guardrails – work together. For example, throughout the development of the final rules, Treasury and the IRS coordinated with Commerce and the Department of Defense to align the final rules in a way that is consistent with Commerce’s national security guardrails rule for CHIPS for America funding (15 C.F.R. part 231).
The CHIPS ITC final rules announced today are largely in line with proposed regulations released in March 2023 while providing certain modifications to the proposed rules to give taxpayers clarity and certainty. For example, the final rules provide additional clarity on the definition of what constitutes an “advanced manufacturing facility,” including clarifying the inclusion of semiconductor wafer production in the definition of semiconductor manufacturing.
The final rule clarifies that semiconductor wafer production includes the production of wafers used for photovoltaic solar energy generation. Treasury and IRS, with the Department of Energy and other agencies, continue to evaluate additional options to further the Administration’s goal of incentivizing domestic production of the full solar supply chain, including solar wafers.
About CHIPS for America and the CHIPS and Science Act:
CHIPS for America has allocated more than $36 billion in proposed funding across 20 states and proposed to invest billions more in research and innovation, which is expected to create over 125,000 jobs. Since the beginning of the Biden-Harris Administration, semiconductor and electronics companies have announced over $400 billion in private investments, catalyzed in large part by public investment. CHIPS for America is part of President Biden and Vice President Harris’s economic plan to invest in America, stimulate private sector investment, create good-paying jobs, make more in the United States, and revitalize communities left behind. CHIPS for America includes the CHIPS Program Office, responsible for manufacturing incentives, and the CHIPS Research and Development Office, responsible for R&D programs, that both sit within the National Institute of Standards and Technology (NIST) at the Department of Commerce. Visit https://www.chips.gov to learn more.
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