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FOLLOWING HIS PUSH, SCHUMER ANNOUNCES FEDS RELEASE ROADMAP FOR GAME CHANGING CHIPS & SCIENCE ACT’S INVESTMENT TAX CREDIT – TO GET SHOVELS IN THE GROUND AND BOOST SEMICONDUCTOR INDUSTRY JOBS IN UPSTATE NY

Schumer’s Historic CHIPS & Science Bill Has Already Spurred The Proposed Creation Of Thousands Of Jobs In Upstate NY – With Billions In CHIPS Grants On The Horizon

Now, Following His Push, Treasury Releases Guidance On New Investment Tax Credit, Vital To Upstate Semiconductor Manufacturers, To Level The Playing Field With Overseas Competitors And Accelerate Ongoing Chip Projects In Upstate NY

Schumer: New ITC, Investment Tax Credit Means Jobs, Jobs, Jobs For Upstate NY

Following his direct advocacy to accelerate the implementation of the game-changing Investment Tax Credit (ITC) for semiconductor manufacturing, U.S. Senate Majority Leader Charles E. Schumer today announced the U.S. Department of Treasury has now released the initial guidance for the ITC, which Schumer fought to include in the final CHIPS and Science Act. 

The ITC, in combination with the major Commerce Department funding for microchip manufacturing that Schumer also passed into law, is critical to the many new and ongoing semiconductor and supply chain projects in Upstate New York. In addition to the ITC guidance released this week, the Departments of Commerce and Treasury also released implementation plans for the national security guardrails Schumer pushed to include in the CHIPS and Science Act  to ensure companies use this federal investment to expand manufacturing in the U.S., not countries like China.

Schumer explained that the roadmap released by the feds this week is the first step to provide clarity and certainty to get shovels in the ground quicker, creating good-paying jobs, and ensuring the success of projects like Micron in Central NY, and others from the Hudson Valley and Capital Region to the Mohawk Valley, North Country, and Western New York. There will now be a 60 day comment period to provide feedback on the proposed guidance.

Senator Schumer said, “The roadmap put out by Treasury this week for the implementation of the CHIPS Investment Tax Credit will help accelerate the hundreds of billions in investment and thousands of good-paying semiconductor and supply chain jobs coming to communities across Upstate New York. Without the ITC and other historic incentives I created in my CHIPS and Science Act, major investments like Micron’s in Central New York would have gone overseas. The proposed ITC guidance is a major step to realizing the vision of the CHIPS and Science Act to level the playing field with incentives offered by competitors overseas, so places like Albany, Syracuse, the Mohawk Valley, and the Hudson Valley can compete with the world for semiconductor manufacturing jobs and ensure the future is made with Upstate New York workers. The additional release of the national security protections for CHIPS investment that I fought to include in the final bill will ensure that these critical federal incentives spur new manufacturing jobs here in the U.S., not in China, Asia or Europe.”

Last month, Schumer wrote directly to U.S. Department of Treasury Secretary Janet Yellen urging the swift and comprehensive implementation of the Investment Tax Credit (ITC) for semiconductors for to boost projects in Upstate NY.

Schumer explained that the United States, which developed and pioneered semiconductor technology, for too long has been reliant on foreign producers of semiconductors, putting our national and economic security at risk. Currently, only 12% of chips are manufactured domestically, compared to 37% in the 1990s, and many foreign competitors, including China, are investing heavily to dominate the industry. Nearly 75% of global semiconductor production is now occurring in East Asia, and foreign government subsidies drive the majority of the cost difference for producing semiconductors overseas.

Schumer said the Advanced Manufacturing Investment Tax Credit, in tandem with the other federal investments included in his CHIPS and Science Act, has helped start to turn the tide on this trend by bringing manufacturing back to America and investing in other key technology and R&D, so places like Upstate New York can lead the world in innovation and manufacturing. Schumer said that the billions in Commerce CHIPS funding, while substantial, will not fully make up for the foreign cost differential, and the ITC is essential to help fill this gap through targeted support to grow American semiconductor manufacturing. Schumer personally negotiated the inclusion of the ITC in the final CHIPS and Science Act to ensure the necessary incentives are in place to bring microchip manufacturing back to the U.S., especially to Upstate New York.

Specifically, the ITC provides a 25% investment tax credit for investments in semiconductor manufacturing. The credit covers both manufacturing equipment as well as the construction of semiconductor manufacturing facilities. It also includes incentives for manufacturing the specialized tooling equipment required in the semiconductor manufacturing process. Schumer said the ITC is a game-changer that, when paired with the Commerce CHIPS funding, would help erase the cost difference for semiconductor production happening across Upstate New York and the country.

The proposed guidelines and regulations released this week provided important updates for what companies must do in order to tap the CHIPS ITC. Details of the proposed guidance include:

  • Defining key terms for the credit, which is generally equal to 25% of an eligible taxpayer’s qualified investment in a facility with the primary purpose of manufacturing semiconductors or semiconductor manufacturing equipment and are integral to the operation of the facility.
  • Timing guidelines for large, long-term projects that start construction before the end of 2026. The credit is generally available for qualified property that began construction after enactment of the CHIPS Act (August 9, 2022) and before December 31, 2026.
  • Rules to prohibit foreign entities of concern from claiming the tax credit and to prevent use of the funds to invest in countries like China. The statute included a requirement that claws back the full value of any ITC if a taxpayer (or affiliates) materially expands semiconductor manufacturing capacity of the taxpayer in a foreign country of concern, like China, Russia, Iran, and North Korea.

In addition to the ITC guidelines released today, the Departments of Commerce and Treasury released guidelines on the national security safeguards for federal CHIPS investment. These include implementation of the following from the CHIPS and Science Act:

  • Prohibits recipients of CHIPS incentives funds from using the funds in other countries.
  • Significantly restricts recipients of CHIPS incentives funds from investing in most semiconductor manufacturing in foreign countries of concern for 10 years after the date of award.
  • Limits recipients of CHIPS incentives funds from engaging in joint research or technology licensing efforts with a foreign entity of concern that relates to a technology or product that raises national security concerns.

In New York State alone, Micron has announced an historic $100 billion investment to build a cutting-edge memory fab in Central New York—a project which the company has said requires the ITC to be successful.  GlobalFoundries plans to build a second fab in the Capital Region that will be a key supplier to the auto and defense industries, onsemi recently acquired a fab in the Hudson Valley to be home to the only 12-inch power discrete and image sensor fab in America, and Wolfspeed recently opened the first, largest, and only 200mm silicon carbide fabrication facility in the world in the Mohawk Valley. In addition, suppliers like Corning Incorporated, which manufacturers glass critical to the microchip industry at its Canton and Fairport, NY plants, as well as Edwards Vacuum, which recently announced a $319 million investment to build a U.S. dry pump manufacturing facility in the Western New York Science & Technology Advanced Manufacturing Park (STAMP) to supply the microchip industry, see the ITC as integral to the success of their proposed Upstate New York expansions. Schumer said the ITC is critical for accelerating and expanding the semiconductor industry in New York across these large-scale, job creating projects.

A copy of Schumer’s original letter to Treasury Secretary Yellen appears below:

Dear Secretary Yellen:

I write to express my concerns regarding the proper design of the guidance and prompt implementation of the Investment Tax Credit (ITC) for semiconductors.  I fought hard to include the ITC as part of the CHIPS and Science Act because it is an essential tool, alongside the new federal CHIPS incentives being implemented at the Department of Commerce, to bring semiconductor manufacturing back to the U.S.  As we continue to address supply chain concerns and national security threats, strengthening our nation’s semiconductor supply chains is an urgent task that requires us to put in place as quickly as possible the new federal programs we have passed into law.  

Companies are eager to make investments and move forward on game-changing projects across the country, but they want the certainty that the incentives are accessible.  In New York State alone, Micron has announced an historic $100 billion investment to build a cutting-edge memory fab in Central New York—a project that will require the ITC to be successful.  GlobalFoundries plans to build a second fab in the Capital Region that will be a key supplier to the auto and defense industries, onsemi recently acquired a fab in the Hudson Valley to be home to the only 12-inch power discrete and image sensor fab in America, and Wolfspeed recently opened the first, largest, and only 200mm silicon carbide fabrication facility in the world in the Mohawk Valley. These companies see the ITC as critical to accelerating and expanding their investment plans.  Additionally, suppliers like Corning Incorporated, which manufacturers glass critical to the microchip industry at its Canton and Fairport, NY plants, as well as Edwards Vacuum, which recently announced a $319 million investment to build a U.S. dry pump manufacturing facility in the Western New York Science & Technology Advanced Manufacturing Park (STAMP) to supply the microchip industry, see the ITC as integral to the success of their proposed U.S. expansions.

As you know, some projects applying for the ITC and CHIPS funding will be onshoring manufacturing through a phased approach.  The ITC is designed not only to enable the initial phase of a domestic greenfield fab project but also to enable continued investment as the market expands and advances.  In addition, some projects designed to be funded by CHIPS will also utilize an ongoing, phased approach to construction in order to create integrated fabs in an advanced manufacturing facility.  I hope you will factor these logistical constraints into the regulatory design of the CHIPS ITC.

I am also interested in several components of the CHIPS Act implementation related to project timelines.  First, I ask for careful consideration of the design of the commence construction guidance for the ITC.  The guidance should match Congress’s intent that CHIPS Act projects be able to restore large-scale semiconductor manufacturing to the U.S. over time in phases and therefore should match the duration of projects funded by other CHIPS incentives.  Second, I urge consideration of the time constraints imposed by the National Environmental Policy Act (NEPA) process, which should not impede the ability to use the ITC.  Third, guidance with respect to project start dates for ITC eligibility should reflect realistic timelines, with the goal of allowing widespread private sector uptake.  Finally, in implementing the ITC, Treasury should take note of the diversity of equipment necessary for the successful expansion of a domestic microchip industry, including equipment needed to produce silicon and silicon carbide and equipment included in lithography machines that are essential to chip production.

Bringing semiconductor manufacturing back to the U.S. is an urgent priority for our economic competitiveness and national security.  I worked tirelessly to pass the CHIPS and Science Act with the ITC included to address this pressing national need, and its thoughtful implementation by the Department of Treasury and others is critical to ensuring the success of the legislation--enabling semiconductor companies to invest in new manufacturing in the U.S. and ensure our country leads the world in this critical technology for generations to come.

I welcome further discussion on this issue. Thank you for your consideration.

Sincerely,

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