US Senate approves bill with R&D funding for semiconductor industry

By Doug Connolly, MNE Tax

The US Senate passed with bipartisan support on June 8 a bill that would authorize new funding for research and development (R&D) to boost US competitiveness in the semiconductor industry.

The bill, dubbed the U.S. Competition and Innovation Act, includes USD 50 billion in appropriations for semiconductor manufacturing and R&D activities.

President Biden has signaled his support for the bill. He issued a statement applauding its passage, stating that the legislation “would make generational investments in research and development and advanced manufacturing to help us grow critical industries.”

The bill will still have to pass the House, where its fate is uncertain, before the President could sign it into law.

While the bill includes funding in support of R&D, no expanded R&D tax incentives made it into the version of the bill passed by the Senate. However, on the same day as its passage, a bipartisan group of Senators introduced another bill, The FORWARD Act, to expand tax incentives for R&D.

In his American Jobs Plan, Biden proposed both new direct funding and expanded tax incentives for R&D. Although some specifics of the R&D plans have been lacking, Biden has expressed his interest in reversing a trend under which US investment in R&D has declined in recent years relative to several other countries.

The semiconductor bill has been sold as essential to boost US competitiveness relative to China. However, other countries, including South Korea, are also investing heavily to take the lead in the global semiconductor industry.

US Secretary of Commerce Gina Raimondo said that the funding in the bill “isn’t just about addressing the current semiconductor chip shortage, it is about long-term investments in semiconductor manufacturing and research and development.”