U.S. bipartisan bill aims to provide more than $22.8 billion for establishing domestic chip factory

A bipartisan group of U.S. lawmakers have introduced a bill which aims to provide more than $22.8 billion in aid to U.S.-based semiconductor manufacturers. The development comes at a time when the Trump Administration is making efforts to spurr the construction of chip factories in the United States.

Chip factories come with a hefty price tag of up to $15 billion, with the bulk of the expense in the form of pricey tools.

The bills proposes to create a 40% refundable income tax credit for semiconductor equipment, $10 billion in federal funds to match state incentives to build factories, and $12 billion in research and development funding.

The bills also aims to authorize the Defense Department to use funding under the Defense Production Act to “establish and enhance a domestic semiconductor production capability.”

Although the U.S. has a network of “trusted foundries” from which the U.S. government sources its supply of chips, many semiconductors are still sourced from Asia.

The bill has been introduced by John Cornyn, a Republican Senator from Texas, and Mark Warner, a Democrat from Virginia. According to their aides, the duo plan on introducing a version of the bill in the U.S. House of Representatives later today.

Currently tech companies including Apple Inc, Qualcomm Inc and Nvidia Corp rely on Taiwan’s TSMC and other Asian foundries to manufacture their chips.

China’s move to strengthen its iron grip over Hong Kong as well as the shock of the coronavirus, which emerged in Wuhan, China, and which ravaged long established supply chains have prompted alarm bells in Washington over having to depend on its ally for advanced chip manufacturing facilities.

Taiwan is located on a narrow strait from China which has repeatedly threatened to invade the country claiming it to be a runaway province.

Last month, TSMC said it plans on building a chip factory in Arizona.

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