CHIPS for America Act

I 116TH CONGRESS 2D SESSION H. R. 7178 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 HOUSE OF REPRESENTATIVES JUNE 11, 2020 Mr. MCCAUL (for himself and Ms. MATSUI) introduced the following bill; which was referred to the Committee on Science, Space, and Technology, and in addition to the Committees on Ways and Means, Armed Services, Financial Services, Energy and Commerce, and Foreign Affairs, for a pe- riod to be subsequently determined by the Speaker, in each case for con- sideration of such provisions as fall within the jurisdiction of the com- mittee concerned 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 VerDate Sep 11 2014 21:06 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 2 •HR 7178 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Creating Helpful In- 2 centives to Produce Semiconductors for America Act’’ or 3 the ‘‘CHIPS for America Act’’. 4 SEC. 2. SEMICONDUCTOR INVESTMENT TAX CREDIT. 5 (a) ESTABLISHMENT OF CREDIT.—Subpart E of part 6 IV of subchapter A of chapter 1 of the Internal Revenue 7 Code of 1986 is amended by inserting after section 48C 8 the following: 9 ‘‘SEC. 48D. QUALIFYING SEMICONDUCTOR EQUIPMENT 10 CREDIT. 11 ‘‘(a) IN GENERAL.—For purposes of section 46, the 12 qualifying semiconductor equipment credit for any taxable 13 year is the applicable percentage of— 14 ‘‘(1) the basis of any qualified semiconductor 15 equipment placed in service during such taxable 16 year, 17 ‘‘(2) any qualified semiconductor manufacturing 18 facility investment expenditures incurred during 19 such taxable year, and 20 ‘‘(3) any expenses incurred by the taxpayer dur- 21 ing such taxable year with respect to entering into 22 a lease (including renewal or extension of a lease) 23 for qualified semiconductor equipment. 24 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 25 subsection (a), the applicable percentage is— 26 VerDate Sep 11 2014 22:26 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 3 •HR 7178 IH ‘‘(1) 40 percent in the case of any qualified 1 semiconductor equipment which is placed in service 2 before January 1, 2025, or any qualified semicon- 3 ductor manufacturing facility investment expendi- 4 tures or expenses described in subsection (a)(3) 5 which are incurred before such date, 6 ‘‘(2) 30 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, 2024, and before January 1, 2026, 10 ‘‘(3) 20 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, 2025, and before January 1, 2027, and 14 ‘‘(4) 0 percent in the case of any such equip- 15 ment which is placed in service, or any such expendi- 16 tures or expenses which are incurred, after Decem- 17 ber 31, 2026. 18 ‘‘(c) QUALIFIED SEMICONDUCTOR EQUIPMENT.— 19 For purposes of this section, the term ‘qualified semicon- 20 ductor equipment’ means any property— 21 ‘‘(1) which has been identified by the Secretary, 22 in consultation with the Secretary of Commerce, as 23 machinery or equipment that is designed and used 24 to— 25 VerDate Sep 11 2014 22:26 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 4 •HR 7178 IH ‘‘(A) manufacture or process semiconduc- 1 tors, or 2 ‘‘(B) perform research with respect to 3 semiconductors, 4 ‘‘(2) which is placed in service in the United 5 States by the taxpayer, and 6 ‘‘(3) with respect to which depreciation (or am- 7 ortization in lieu of depreciation) is allowable. 8 ‘‘(d) QUALIFIED SEMICONDUCTOR MANUFACTURING 9 FACILITY INVESTMENT EXPENDITURES.—For purposes 10 of this section, the term ‘qualified semiconductor manufac- 11 turing facility investment expenditure’ means any amount 12 properly chargeable to capital account— 13 ‘‘(1) for property for which depreciation is al- 14 lowable under section 168, and 15 ‘‘(2) in connection with the construction or up- 16 grading of any facility located in the United States 17 which substantially operates qualified semiconductor 18 equipment, including— 19 ‘‘(A) costs relating to— 20 ‘‘(i) acquiring or upgrading an exist- 21 ing building, or 22 ‘‘(ii) construction of a new building, 23 and 24 ‘‘(B) property such as— 25 VerDate Sep 11 2014 22:26 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 5 •HR 7178 IH ‘‘(i) integrated systems, fixtures, pip- 1 ing, movable partitions, and lighting, and 2 ‘‘(ii) any property which has been 3 identified by the Secretary, in consultation 4 with the Secretary of Commerce, as nec- 5 essary or adapted to— 6 ‘‘(I) reduce contamination, or 7 ‘‘(II) control air flow, tempera- 8 ture, humidity, chemical purity, or 9 other environmental conditions or 10 manufacturing tolerances. 11 ‘‘(e) CERTAIN PROGRESS EXPENDITURE RULES 12 MADE APPLICABLE.—Rules similar to the rules of sub- 13 sections (c)(4) and (d) of section 46 (as in effect on the 14 day before the date of the enactment of the Revenue Rec- 15 onciliation Act of 1990) shall apply for purposes of sub- 16 section (a). 17 ‘‘(f) TREATMENT OF CREDIT.—The amount of the 18 credit determined under this section with respect to any 19 qualified semiconductor equipment placed in service before 20 January 1, 2027, or any qualified semiconductor manufac- 21 turing facility investment expenditures incurred before 22 such date, shall be treated as a credit allowable under sub- 23 part C (and not allowable under section 38). 24 ‘‘(g) DENIAL OF DOUBLE BENEFIT.— 25 VerDate Sep 11 2014 22:26 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 6 •HR 7178 IH ‘‘(1) REDUCTION OF BASIS.—If a credit is de- 1 termined under this section with respect to any 2 property, the basis of such property shall be reduced 3 by the amount of the credit so determined. 4 ‘‘(2) OTHER CREDITS.—No credit shall be al- 5 lowed under any provision of this chapter with re- 6 spect to any amount taken in account in determining 7 the credit allowed to a taxpayer under this section. 8 ‘‘(h) RULES RELATING TO LEASED PROPERTY.—For 9 purposes of subsection (a)(3), rules similar to the rules 10 under section 48(d) (as in effect on the day before the 11 date of the enactment of the Revenue Reconciliation Act 12 of 1990) shall apply. 13 ‘‘(i) DISALLOWANCE.—No credit shall be allowed 14 under this section with respect to any qualified semicon- 15 ductor equipment which is used predominantly outside the 16 United States. 17 ‘‘(j) PARTNERSHIPS.—In the case of a credit under 18 subsection (a) which is determined at the partnership 19 level, with respect to any partner which is exempt from 20 taxation under section 501(a), such partner may elect to 21 transfer their distributive share of such credit to any other 22 partner in the partnership. 23 ‘‘(k) REGULATIONS.—The Secretary shall prescribe 24 such regulations or other guidance as may be necessary 25 VerDate Sep 11 2014 22:26 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 7 •HR 7178 IH to carry out the purposes of this section, including any 1 such measures as are deemed appropriate to avoid abuse 2 or fraud with respect to the credit allowed under this sec- 3 tion.’’. 4 (b) TAX ON BASE EROSION PAYMENTS OF TAX- 5 PAYERS WITH SUBSTANTIAL GROSS RECEIPTS.—Section 6 59A(b)(1)(B)(ii) of the Internal Revenue Code of 1986 is 7 amended— 8 (1) in subclause (II), by striking the period at 9 the end and inserting ‘‘, plus’’, and 10 (2) by adding at the end the following: 11 ‘‘(III) the credit determined 12 under section 48D for the taxable 13 year.’’. 14 (c) INVESTMENT CREDIT.—Section 46 of the Inter- 15 nal Revenue Code of 1986 is amended by striking ‘‘and’’ 16 at the end of paragraph (5), by striking the period at the 17 end of paragraph (6) and inserting ‘‘, and’’, and by adding 18 at the end the following new paragraph: 19 ‘‘(7) the qualifying semiconductor equipment 20 credit.’’. 21 (d) CLERICAL AMENDMENT.—The table of sections 22 for subpart E of part IV of subchapter A of chapter 1 23 of the Internal Revenue Code of 1986 is amended by in- 24 VerDate Sep 11 2014 22:26 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 8 •HR 7178 IH serting after the item relating to section 48C the following 1 new item: 2 ‘‘Sec. 48D. Qualifying semiconductor equipment credit.’’. (e) EFFECTIVE DATE.—The amendments made by 3 this section shall apply to any qualified semiconductor 4 equipment (as defined in subsection (c) of section 48D) 5 placed in service after the date of enactment of this Act, 6 or any qualified semiconductor manufacturing facility in- 7 vestment expenditure (as defined in subsection (d) of such 8 section) incurred after such date. 9 SEC. 3. BUILDING UNITED STATES CAPACITY FOR 10 VERIFICATION AND MANUFACTURING OF AD- 11 VANCED MICROELECTRONICS. 12 (a) PROGRAM.—The Secretary of Commerce, acting 13 through the Director of the National Institute of Stand- 14 ards and Technology, shall carry out a program of re- 15 search and development investment to enable advances 16 and breakthroughs in measurement science, standards, 17 material characterization, instrumentation, testing, and 18 manufacturing capabilities that will accelerate the under- 19 lying research and development for design, development, 20 and manufacturability of next generation microelectronics 21 and ensure the competitiveness and leadership of the 22 United States within this sector. 23 (b) COMPONENTS.—The program required by sub- 24 section (a) shall cover the following: 25 VerDate Sep 11 2014 22:26 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 9 •HR 7178 IH (1) Advanced metrology and characterization 1 for manufacturing of microchips using 3 nanometer 2 transistor processes or more advanced processes. 3 (2) Metrology for security and supply chain 4 verification. 5 (3) Creation of a Manufacturing USA institute 6 described in section 34(d) of the National Institute 7 of Standards and Technology Act (15 U.S.C. 8 278s(d)) that is focused on semiconductor manufac- 9 turing. Such institute may emphasize the following: 10 (A) Research to support the virtualization 11 and automation of maintenance of semicon- 12 ductor machinery. 13 (B) Development of new advanced test, as- 14 sembly and packaging capabilities. 15 (C) Developing and deploying educational 16 and skills training curricula needed to support 17 the industry sector and ensure the U.S. can 18 build and maintain a trusted and predictable 19 talent pipeline. 20 (c) AUTHORIZATION OF APPROPRIATIONS.—There 21 are authorized to be appropriated to the Secretary 22 amounts as follows: 23 (1) To carry out subsection (b)(1), $10,000,000 24 for each of fiscal years 2021 through 2025. 25 VerDate Sep 11 2014 21:06 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 10 •HR 7178 IH (2) To carry out subsection (b)(2), $10,000,000 1 for each of fiscal years 2021 through 2025. 2 (3) To carry out subsection (b)(3), $30,000,000 3 for each of fiscal years 2021 through 2025. 4 SEC. 4. FEDERAL GRANTS TO MATCH STATE INCENTIVES. 5 (a) DEFINITIONS.—In this section— 6 (1) the term ‘‘appropriate committees of Con- 7 gress’’ means— 8 (A) the Select Committee on Intelligence, 9 the Committee on Commerce, Science, and 10 Transportation, the Committee on Foreign Re- 11 lations, the Committee on Armed Services, and 12 the Committee on Homeland Security and Gov- 13 ernmental Affairs of the Senate; and 14 (B) the Permanent Select Committee on 15 Intelligence, the Committee on Energy and 16 Commerce, the Committee on Foreign Affairs, 17 the Committee on Armed Services, the Com- 18 mittee on Science, Space, and Technology, and 19 the Committee on Homeland Security of the 20 House of Representatives; 21 (2) the term ‘‘covered incentive’’— 22 (A) means an incentive offered by a gov- 23 ernmental entity to a private entity for the pur- 24 poses of building within the jurisdiction of the 25 VerDate Sep 11 2014 21:06 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 11 •HR 7178 IH governmental entity a fabrication (or other es- 1 sential) facility relating to the manufacturing of 2 semiconductors; and 3 (B) includes any tax incentive (such as an 4 incentive or reduction with respect to employ- 5 ment or payroll taxes or a tax abatement with 6 respect to personal or real property), a work- 7 force-related incentive (including a grant agree- 8 ment relating to workforce training or voca- 9 tional education), any concession with respect 10 to real property, and any other incentive deter- 11 mined appropriate by the Secretary, in con- 12 sultation with the Secretary of State; 13 (3) the term ‘‘governmental entity’’ means a 14 State or local government; and 15 (4) the term ‘‘Secretary’’ means the Secretary 16 of Commerce. 17 (b) GRANTS.— 18 (1) IN GENERAL.—The Secretary shall establish 19 in the Department of Commerce a program that, in 20 accordance with the requirements of this section, 21 provides grants to governmental entities that offer 22 covered incentives. 23 (2) PROCEDURE.— 24 VerDate Sep 11 2014 21:06 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H7178.IH H7178 khammond on DSKJM1Z7X2PROD with BILLS 12 •HR 7178 IH (A) IN GENERAL.—A governmental entity 1 that offers a covered incentive and that desires 2 to receive a grant under this subsection shall 3 submit to the Secretary an application that de- 4 scribes the covered incentive offered by the gov- 5 ernmental entity. 6 (B) CONDITIONS FOR APPROVAL.—The 7 Secretary shall approve an application sub- 8 mitted by a governmental entity under subpara- 9 [Text truncated for display. 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