The US Senate approved legislation Tuesday raising investment tax credits for U.S. semiconductor facilities to 35%, surpassing the 25% rate established under the Biden administration’s CHIPS Act. The measure, part of President Donald Trump’s broader tax package, exceeded an earlier 30% proposal and must still clear the House before reaching Trump’s desk.
Companies including Taiwan Semiconductor Manufacturing Co. stand to benefit if they break ground before the existing 2026 deadline. The enhanced credit represents the largest federal incentive for most chipmakers, potentially dwarfing direct grants from the $39 billion CHIPS program.
The policy shift comes as Trump pursues a different approach than his predecessor, previously calling for the CHIPS Act’s repeal while favoring tariffs over subsidies. Yet the administration now finds itself expanding Biden-era incentives to accelerate domestic manufacturing.
The threat of Trump’s tariffs has created urgency for semiconductor companies to expand U.S. capacity, according to industry observers. However, questions remain about execution. Building advanced fabs typically requires years and costs can exceed $28 billion for cutting-edge facilities.
The bill passed with Vice President JD Vance casting a tie-breaking vote in the 50-50 Senate. House passage before the July 4 recess remains uncertain, with Republicans holding only a narrow majority and facing internal opposition to the broader tax package.
