CHIPS for America Act

II 116TH CONGRESS 2D SESSION S. 3933 To restore American leadership in semiconductor manufacturing by increasing Federal incentives in order to enable advanced research and development, secure the supply chain, and ensure long-term national security and economic competitiveness. IN THE SENATE OF THE UNITED STATES JUNE 10, 2020 Mr. CORNYN (for himself, Mr. WARNER, Mr. RISCH, Mr. RUBIO, and Ms. SINEMA) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To restore American leadership in semiconductor manufac- turing by increasing Federal incentives in order to enable advanced research and development, secure the supply chain, and ensure long-term national security and eco- nomic competitiveness. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Creating Helpful In- 4 centives to Produce Semiconductors for America Act’’ or 5 the ‘‘CHIPS for America Act’’. 6 VerDate Sep 11 2014 20:42 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 2 •S 3933 IS SEC. 2. SEMICONDUCTOR INVESTMENT TAX CREDIT. 1 (a) ESTABLISHMENT OF CREDIT.—Subpart E of part 2 IV of subchapter A of chapter 1 of the Internal Revenue 3 Code of 1986 is amended by inserting after section 48C 4 the following: 5 ‘‘SEC. 48D. QUALIFYING SEMICONDUCTOR EQUIPMENT 6 CREDIT. 7 ‘‘(a) IN GENERAL.—For purposes of section 46, the 8 qualifying semiconductor equipment credit for any taxable 9 year is the applicable percentage of— 10 ‘‘(1) the basis of any qualified semiconductor 11 equipment placed in service during such taxable 12 year, 13 ‘‘(2) any qualified semiconductor manufacturing 14 facility investment expenditures incurred during 15 such taxable year, and 16 ‘‘(3) any expenses incurred by the taxpayer dur- 17 ing such taxable year with respect to entering into 18 a lease (including renewal or extension of a lease) 19 for qualified semiconductor equipment. 20 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 21 subsection (a), the applicable percentage is— 22 ‘‘(1) 40 percent in the case of any qualified 23 semiconductor equipment which is placed in service 24 before January 1, 2025, or any qualified semicon- 25 ductor manufacturing facility investment expendi- 26 VerDate Sep 11 2014 23:50 Jun 25, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 3 •S 3933 IS tures or expenses described in subsection (a)(3) 1 which are incurred before such date, 2 ‘‘(2) 30 percent in the case of any such equip- 3 ment which is placed in service, or any such expendi- 4 tures or expenses which are incurred, after Decem- 5 ber 31, 2024, and before January 1, 2026, 6 ‘‘(3) 20 percent in the case of any such equip- 7 ment which is placed in service, or any such expendi- 8 tures or expenses which are incurred, after Decem- 9 ber 31, 2025, and before January 1, 2027, and 10 ‘‘(4) 0 percent in the case of any such equip- 11 ment which is placed in service, or any such expendi- 12 tures or expenses which are incurred, after Decem- 13 ber 31, 2026. 14 ‘‘(c) QUALIFIED SEMICONDUCTOR EQUIPMENT.— 15 For purposes of this section, the term ‘qualified semicon- 16 ductor equipment’ means any property— 17 ‘‘(1) which has been identified by the Secretary, 18 in consultation with the Secretary of Commerce, as 19 machinery or equipment that is designed and used 20 to— 21 ‘‘(A) manufacture or process semiconduc- 22 tors, or 23 ‘‘(B) perform research with respect to 24 semiconductors, 25 VerDate Sep 11 2014 23:50 Jun 25, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 4 •S 3933 IS ‘‘(2) which is placed in service in the United 1 States by the taxpayer, and 2 ‘‘(3) with respect to which depreciation (or am- 3 ortization in lieu of depreciation) is allowable. 4 ‘‘(d) QUALIFIED SEMICONDUCTOR MANUFACTURING 5 FACILITY INVESTMENT EXPENDITURES.—For purposes 6 of this section, the term ‘qualified semiconductor manufac- 7 turing facility investment expenditure’ means any amount 8 properly chargeable to capital account— 9 ‘‘(1) for property for which depreciation is al- 10 lowable under section 168, and 11 ‘‘(2) in connection with the construction or up- 12 grading of any facility located in the United States 13 which substantially operates qualified semiconductor 14 equipment, including— 15 ‘‘(A) costs relating to— 16 ‘‘(i) acquiring or upgrading an exist- 17 ing building, or 18 ‘‘(ii) construction of a new building, 19 and 20 ‘‘(B) property such as— 21 ‘‘(i) integrated systems, fixtures, pip- 22 ing, movable partitions, and lighting, and 23 ‘‘(ii) any property which has been 24 identified by the Secretary, in consultation 25 VerDate Sep 11 2014 20:23 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 5 •S 3933 IS with the Secretary of Commerce, as nec- 1 essary or adapted to— 2 ‘‘(I) reduce contamination, or 3 ‘‘(II) control air flow, tempera- 4 ture, humidity, chemical purity, or 5 other environmental conditions or 6 manufacturing tolerances. 7 ‘‘(e) CERTAIN PROGRESS EXPENDITURE RULES 8 MADE APPLICABLE.—Rules similar to the rules of sub- 9 sections (c)(4) and (d) of section 46 (as in effect on the 10 day before the date of the enactment of the Revenue Rec- 11 onciliation Act of 1990) shall apply for purposes of sub- 12 section (a). 13 ‘‘(f) TREATMENT OF CREDIT.—The amount of the 14 credit determined under this section with respect to any 15 qualified semiconductor equipment placed in service before 16 January 1, 2027, or any qualified semiconductor manufac- 17 turing facility investment expenditures incurred before 18 such date, shall be treated as a credit allowable under sub- 19 part C (and not allowable under section 38). 20 ‘‘(g) DENIAL OF DOUBLE BENEFIT.— 21 ‘‘(1) REDUCTION OF BASIS.—If a credit is de- 22 termined under this section with respect to any 23 property, the basis of such property shall be reduced 24 by the amount of the credit so determined. 25 VerDate Sep 11 2014 23:50 Jun 25, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 6 •S 3933 IS ‘‘(2) OTHER CREDITS.—No credit shall be al- 1 lowed under any provision of this chapter with re- 2 spect to any amount taken in account in determining 3 the credit allowed to a taxpayer under this section. 4 ‘‘(h) RULES RELATING TO LEASED PROPERTY.—For 5 purposes of subsection (a)(3), rules similar to the rules 6 under section 48(d) (as in effect on the day before the 7 date of the enactment of the Revenue Reconciliation Act 8 of 1990) shall apply. 9 ‘‘(i) DISALLOWANCE.—No credit shall be allowed 10 under this section with respect to any qualified semicon- 11 ductor equipment which is used predominantly outside the 12 United States. 13 ‘‘(j) PARTNERSHIPS.—In the case of a credit under 14 subsection (a) which is determined at the partnership 15 level, with respect to any partner which is exempt from 16 taxation under section 501(a), such partner may elect to 17 transfer their distributive share of such credit to any other 18 partner in the partnership. 19 ‘‘(k) REGULATIONS.—The Secretary shall prescribe 20 such regulations or other guidance as may be necessary 21 to carry out the purposes of this section, including any 22 such measures as are deemed appropriate to avoid abuse 23 or fraud with respect to the credit allowed under this sec- 24 tion.’’. 25 VerDate Sep 11 2014 23:50 Jun 25, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 7 •S 3933 IS (b) TAX ON BASE EROSION PAYMENTS OF TAX- 1 PAYERS WITH SUBSTANTIAL GROSS RECEIPTS.—Section 2 59A(b)(1)(B)(ii) of the Internal Revenue Code of 1986 is 3 amended— 4 (1) in subclause (II), by striking the period at 5 the end and inserting ‘‘, plus’’, and 6 (2) by adding at the end the following: 7 ‘‘(III) the credit determined 8 under section 48D for the taxable 9 year.’’. 10 (c) INVESTMENT CREDIT.—Section 46 of the Inter- 11 nal Revenue Code of 1986 is amended by striking ‘‘and’’ 12 at the end of paragraph (5), by striking the period at the 13 end of paragraph (6) and inserting ‘‘, and’’, and by adding 14 at the end the following new paragraph: 15 ‘‘(7) the qualifying semiconductor equipment 16 credit.’’. 17 (d) CLERICAL AMENDMENT.—The table of sections 18 for subpart E of part IV of subchapter A of chapter 1 19 of the Internal Revenue Code of 1986 is amended by in- 20 serting after the item relating to section 48C the following 21 new item: 22 ‘‘Sec. 48D. Qualifying semiconductor equipment credit.’’. (e) EFFECTIVE DATE.—The amendments made by 23 this section shall apply to any qualified semiconductor 24 equipment (as defined in subsection (c) of section 48D) 25 VerDate Sep 11 2014 23:50 Jun 25, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 8 •S 3933 IS placed in service after the date of enactment of this Act, 1 or any qualified semiconductor manufacturing facility in- 2 vestment expenditure (as defined in subsection (d) of such 3 section) incurred after such date. 4 SEC. 3. BUILDING UNITED STATES CAPACITY FOR VERI- 5 FICATION AND MANUFACTURING OF AD- 6 VANCED MICROELECTRONICS. 7 (a) PROGRAM.—The Secretary of Commerce, acting 8 through the Director of the National Institute of Stand- 9 ards and Technology, shall carry out a program of re- 10 search and development investment to enable advances 11 and breakthroughs in measurement science, standards, 12 material characterization, instrumentation, testing, and 13 manufacturing capabilities that will accelerate the under- 14 lying research and development for design, development, 15 and manufacturability of next generation microelectronics 16 and ensure the competitiveness and leadership of the 17 United States within this sector. 18 (b) COMPONENTS.—The program required by sub- 19 section (a) shall cover the following: 20 (1) Advanced metrology and characterization 21 for manufacturing of microchips using 3 nanometer 22 transistor processes or more advanced processes. 23 (2) Metrology for security and supply chain 24 verification. 25 VerDate Sep 11 2014 23:50 Jun 25, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 9 •S 3933 IS (3) Creation of a Manufacturing USA institute 1 described in section 34(d) of the National Institute 2 of Standards and Technology Act (15 U.S.C. 3 278s(d)) that is focused on semiconductor manufac- 4 turing. Such institute may emphasize the following: 5 (A) Research to support the virtualization 6 and automation of maintenance of semicon- 7 ductor machinery. 8 (B) Development of new advanced test, as- 9 sembly and packaging capabilities. 10 (C) Developing and deploying educational 11 and skills training curricula needed to support 12 the industry sector and ensure the U.S. can 13 build and maintain a trusted and predictable 14 talent pipeline. 15 (c) AUTHORIZATION OF APPROPRIATIONS.—There 16 are authorized to be appropriated to the Secretary 17 amounts as follows: 18 (1) To carry out subsection (b)(1), $10,000,000 19 for each of fiscal years 2021 through 2025. 20 (2) To carry out subsection (b)(2), $10,000,000 21 for each of fiscal years 2021 through 2025. 22 (3) To carry out subsection (b)(3), $30,000,000 23 for each of fiscal years 2021 through 2025. 24 VerDate Sep 11 2014 21:06 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 10 •S 3933 IS SEC. 4. FEDERAL GRANTS TO MATCH STATE INCENTIVES. 1 (a) DEFINITIONS.—In this section— 2 (1) the term ‘‘appropriate committees of Con- 3 gress’’ means— 4 (A) the Select Committee on Intelligence, 5 the Committee on Commerce, Science, and 6 Transportation, the Committee on Foreign Re- 7 lations, the Committee on Armed Services, and 8 the Committee on Homeland Security and Gov- 9 ernmental Affairs of the Senate; and 10 (B) the Permanent Select Committee on 11 Intelligence, the Committee on Energy and 12 Commerce, the Committee on Foreign Affairs, 13 the Committee on Armed Services, the Com- 14 mittee on Science, Space, and Technology, and 15 the Committee on Homeland Security of the 16 House of Representatives; 17 (2) the term ‘‘covered incentive’’— 18 (A) means an incentive offered by a gov- 19 ernmental entity to a private entity for the pur- 20 poses of building within the jurisdiction of the 21 governmental entity a fabrication (or other es- 22 sential) facility relating to the manufacturing of 23 semiconductors; and 24 (B) includes any tax incentive (such as an 25 incentive or reduction with respect to employ- 26 VerDate Sep 11 2014 21:06 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 11 •S 3933 IS ment or payroll taxes or a tax abatement with 1 respect to personal or real property), a work- 2 force-related incentive (including a grant agree- 3 ment relating to workforce training or voca- 4 tional education), any concession with respect 5 to real property, and any other incentive deter- 6 mined appropriate by the Secretary, in con- 7 sultation with the Secretary of State; 8 (3) the term ‘‘governmental entity’’ means a 9 State or local government; and 10 (4) the term ‘‘Secretary’’ means the Secretary 11 of Commerce. 12 (b) GRANTS.— 13 (1) IN GENERAL.—The Secretary shall establish 14 in the Department of Commerce a program that, in 15 accordance with the requirements of this section, 16 provides grants to governmental entities that offer 17 covered incentives. 18 (2) PROCEDURE.— 19 (A) IN GENERAL.—A governmental entity 20 that offers a covered incentive and that desires 21 to receive a grant under this subsection shall 22 submit to the Secretary an application that de- 23 scribes the covered incentive offered by the gov- 24 ernmental entity. 25 VerDate Sep 11 2014 21:06 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3933.IS S3933 khammond on DSKJM1Z7X2PROD with BILLS 12 •S 3933 IS (B) CONDITIONS FOR APPROVAL.—The 1 Secretary shall approve an application sub- 2 mitted by a governmental entity under subpara- 3 graph (A)— 4 (i) upon confirmation by the Secretary 5 that the private entity to which the govern- 6 mental entity has offered the covered in- 7 centive to which the application relates has 8 agreed to build in the applicable jurisdic- 9 tion a facility described in subsection 10 (a)( [Text truncated for display. 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