Chipmakers get larger tax credits in Trump’s latest ‘big beautiful bill’

In a significant move to bolster the domestic semiconductor industry, President Donald Trump's latest proposal, referred to as the "big beautiful bill," aims to reduce costs for chip manufacturers establishing plants in the United States. Recently passed by the Senate, this bill proposes an increase in tax credits for semiconductor firms from 25% to an impressive 35%. This adjustment surpasses the initial 30% increase found in earlier drafts of the legislation. Eligible companies, including industry giants like Intel, Taiwan Semiconductor Manufacturing Company, and Micron Technology, must expand their advanced manufacturing capabilities in the U.S. before a 2026 deadline to qualify for these credits. This legislative effort builds upon the tax incentives introduced in the 2022 CHIPS and Science Act, which allocated $39 billion in grants and $75 billion in loans to support semiconductor manufacturing projects within the United States. However, before these enhanced tax credits can take effect, the bill must successfully pass through the House of Representatives, which narrowly approved its version last month. Trump is urging Congress to finalize the bill by July 4. This initiative aligns with ongoing efforts by Washington to relocate a greater portion of the advanced semiconductor supply chain from Asia back to the U.S., while simultaneously supporting domestic companies and curbing China's influence in the sector. It's important to note that while Trump's proposed tax provisions extend the framework of the Biden administration's CHIPS Act, his overall strategy regarding the semiconductor industry differs. Earlier this year, Trump even suggested repealing the CHIPS Act, a notion that has seen hesitation among Republican lawmakers. U.S. Commerce Secretary Howard Lutnick mentioned last month that the current administration is in discussions to renegotiate some of the grants established by the previous administration. Trump has expressed a preference for tariffs over grants as a means to encourage semiconductor production within the U.S. At present, the Trump administration is investigating imports of semiconductor technology, which could potentially lead to new tariffs on the industry. In recent months, several chipmakers have accelerated their investment plans in the U.S., including TSMC, the world’s largest contract chipmaker, alongside American firms such as Nvidia, Micron, and GlobalFoundries. Daniel Newman, CEO of the tech advisory firm Futurum Group, noted that the looming threat of tariffs has intensified the urgency for semiconductor companies to enhance their manufacturing capabilities in the U.S. If the proposed tax credits become law, it is likely that these onshoring efforts will gain further momentum. "Given the risk of tariffs, increasing manufacturing in the U.S. remains a key consideration for these large semiconductor companies," Newman stated, highlighting that the tax credits could help mitigate certain costs associated with domestic projects.