At Supreme Components International, we are dedicated to advancing the global semiconductor ecosystem. The U.S. Department of Treasury and IRS released final regulations for the Advanced Manufacturing Investment Credit (AMIC) on October 22, 2024, under the CHIPS and Science Act. This 25% investment tax credit (Section 48D) provides a clear path for manufacturers to revitalize U.S. chip production. Discover how these semiconductor manufacturing incentives are driving innovation and economic growth.
What the CHIPS Act Tax Credit Means for the Semiconductor Industry
The CHIPS Act tax credit is a cornerstone of the CHIPS and Science Act, aimed at strengthening U.S. semiconductor production and supply chain resilience. As a leading distributor of electronic components, Supreme Components International recognizes the transformative impact of these incentives. The AMIC encourages manufacturers to invest in advanced facilities, equipment, and infrastructure critical for producing semiconductors.
The final regulations offer clarity and flexibility, enabling manufacturers to navigate the complexities of chip production. This aligns with our mission to deliver high-quality components globally while supporting U.S.-based innovation.
Holistic Investment Coverage
The AMIC covers a wide range of qualified investments, including:
- Clean rooms for semiconductor fabrication
- Specialized equipment for chip production
- Infrastructure supporting manufacturing processes
Why It Matters: The complexity of semiconductor manufacturing requires significant capital. The chip manufacturing tax credit enables companies to build cutting-edge facilities in the U.S.
Safe Harbor for Long-Term Projects
The regulations include a safe harbor for projects starting before the credit’s 2026 expiration but continuing afterward, accommodating the cyclical nature of the industry.
Why It Matters: Multi-year projects can benefit from the tax credit throughout their lifecycle, encouraging sustained investment in U.S. semiconductor production.
Streamlined Compliance
The AMIC’s “recapture” provisions align with the Commerce Department’s CHIPS Act grant program, restricting transactions in countries of concern, reducing administrative burdens.
Why It Matters: Simplified compliance helps manufacturers focus on innovation, a priority for Supreme Components International’s partners.
Opportunities for Improvement
While the regulations are a significant step forward, Supreme Components International believes the definition of “semiconductor” should include semiconductor-grade polysilicon, wafers, and compound semiconductors—key supply chain materials. We support industry efforts to advocate for broader coverage to maximize the semiconductor industry investment incentives.
Impact of the CHIPS Act on U.S. Semiconductor Production
The CHIPS Act has spurred unprecedented investment in U.S. chip manufacturing. Industry reports highlight:
- 90 new projects announced nationwide
- $450 billion in private investments
- 58,000+ direct jobs in the semiconductor industry
- Hundreds of thousands of indirect jobs
A Semiconductor Industry Association (SIA) and Boston Consulting Group study projects a 203% increase in U.S. semiconductor capacity by 2032, compared to 11% in the prior decade. These semiconductor manufacturing incentives position the U.S. as a global leader.
Looking Ahead: Strengthening the Semiconductor Ecosystem
Supreme Components International is optimistic about the AMIC’s role in advancing U.S. chip production. Extending the credit beyond 2026 and expanding it to chip design and research would maximize its impact, enhancing U.S. competitiveness and supporting our customers’ innovation.
We are committed to collaborating with industry leaders and policymakers to ensure a thriving semiconductor ecosystem, benefiting the economy, national security, and global technology leadership.
Frequently Asked Questions
What is the Advanced Manufacturing Investment Credit?
The AMIC is a 25% tax credit under the CHIPS Act, incentivizing investments in U.S. semiconductor manufacturing facilities and equipment.
How does the CHIPS Act benefit the semiconductor industry?
It drives private investment, creates jobs, and strengthens U.S. chip production, with $450 billion in investments and 58,000+ jobs.
Can the tax credit apply to ongoing projects?
Yes, a safe harbor provision allows eligibility for projects starting before 2026 but continuing afterward.
About Supreme Components International
Supreme Components International is a trusted global distributor of electronic components, supporting the semiconductor industry with high-quality products and supply chain solutions. Learn more about our mission.