U.S. lawmakers propose $22.8 billion in aid to semiconductor industry

A bipartisan group of U.S. lawmakers on Wednesday introduced a bill to provide more than 22.8 billion U.S. dollars in aid for semiconductor manufacturers, aiming to spur the construction of chip factories in America amid a strategic technology rivalry with China. 

Chip factories can cost up to 15 billion U.S. dollars to build, with much of the expense in the form of pricey tools. The proposal would create a 40 percent refundable income tax credit for semiconductor equipment, 10 billion U.S. dollars in federal funds to match state incentives to build factories, and 12 billion U.S. dollars in research and development funding. 

It would authorize the Defense Department to use funding under the Defense Production Act to "establish and enhance a domestic semiconductor production capability." While a network of "trusted foundries" exists in the United States to help supply chips to the U.S. government, many chips must still be sourced from Asia.

Senators John Cornyn, a Texas Republican, and Mark Warner, a Virginia Democrat, introduced the bill in the Senate. Aides to Representatives Michael McCaul, a Texas Republican, and Doris Matsui, a California Democrat, said the two planned to introduce a version in the U.S. House of Representatives on Thursday.

While some U.S. firms such as Intel Corp and Micron Technology Inc still make chips in the United States, the industry's center of gravity has shifted to Asia, where Taiwan Semiconductor Manufacturing Co (TSMC) has more than half of the overall market for contract manufacturing chips and an even stronger hold on the most advanced chips. 

Firms, including iPhone maker Apple Inc, Qualcomm Inc and Nvidia Corp all rely on TSMC and other Asian foundries to manufacture their chips.

TSMC last month said it plans to build a factory in Arizona.

(Cover: VCG)

Source(s): Reuters