The US Senate has approved a bill to increase tax credits for semiconductor manufacturers building plants in the country.

The measure, passed on July 1, raises credits from 25% to 35%, up from the 30% proposed earlier.

Eligible companies include Intel, TSMC, and Micron, which must expand their US operations before a 2026 deadline.

This builds on the 2022 CHIPS and Science Act, which provided US$39 billion in grants and US$75 billion in loans.

The bill is part of a broader domestic policy package and still needs approval from the House, which passed a separate version last month. President Donald Trump has urged lawmakers to finalize it by July 4.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ US semiconductor policy reflects bipartisan strategic priority despite tactical differences

The evolution of US semiconductor policy shows remarkable continuity across administrations despite different implementation approaches.

US government involvement in semiconductor competitiveness dates back to 1987 when 14 leading US firms established Sematech with significant federal funding to enhance manufacturing technology through collaborative R&D 1.

This commitment continued with the Obama administration’s 2017 PCAST report, which outlined a three-pillar strategy to maintain US semiconductor leadership: catalyzing innovation, counteracting Chinese industrial policies, and improving the business environment for US producers 2.

While Trump previously called for repealing the Biden administration’s CHIPS Act, his current bill actually expands its tax provisions from 25% to 35%, demonstrating the bipartisan recognition of semiconductor manufacturing as a national security priority.

The consistency across administrations highlights how semiconductor leadership transcends political divisions, even as specific tools, such as grants, tax credits, or tariffs, differ based on broader economic philosophies.

2️⃣ The dual strategy of incentives and tariffs creates complex tradeoffs

Trump’s approach combines the carrot of enhanced tax credits with the stick of potential tariffs, creating a complex calculus for semiconductor firms planning global investments.

The tariff investigation mentioned in the article could significantly impact costs throughout the semiconductor supply chain, with McKinsey analysis showing that even a 10% tariff could substantially increase manufacturing expenses for electronic devices 3.