President Joe Biden recently signed the 2022 CHIPS and Science Act into law, with the goal of revitalizing America's microchip industry. Hemlock Semiconductor, a company based in central Michigan with over six decades of experience, plays a pivotal role in producing a key high-tech material essential for microchips.
President Biden's Vision and Implementation Challenges
During a speech at the White House South Lawn, President Biden highlighted Hemlock Semiconductor as a model for the industry and expressed the potential for expanding similar factories across the nation. However, the Treasury Department and Internal Revenue Service's proposed rules could exclude Hemlock Semiconductor from benefiting from the law's tax breaks, sparking concerns among lawmakers and industry stakeholders.
Political Pushback and Industry Mobilization
Senator Gary Peters of Michigan, a Democrat, has raised objections to the law's implementation, emphasizing the importance of supporting chip-grade polysilicon manufacturers like Hemlock. Governor Gretchen Whitmer and Michigan's congressional delegation have also advocated for including suppliers in the tax breaks to strengthen America's position in the global semiconductor market.
Challenges in Defining Eligibility
The initial draft of the CHIPS tax credit rules focused on finished chip manufacturers, overlooking suppliers like Hemlock Semiconductor. As the industry suppliers lobbied for inclusion, policymakers faced the dilemma of determining which companies should receive federal support within the semiconductor industry.
Industry Concerns and Future Investments
Hemlock Semiconductor, a leading producer of polysilicon essential for microchips, employs a significant workforce and plays a crucial role in the chip manufacturing process. However, the uncertainty surrounding the tax credit rules has left suppliers anxious about the future and hesitant to invest in expanding production facilities.
Impact on Global Competition and National Security
The exclusion of chip suppliers from tax benefits could potentially shift the microchip supply chain overseas, posing challenges to US competitiveness and national security. Advocates warn of a scenario where foreign producers, particularly from China, could challenge Western dominance in semiconductor materials production.
Future Outlook and Policy Considerations
As the final tax credit rules under the CHIPS Act are awaited, industry stakeholders, lawmakers, and policymakers continue to engage in discussions to ensure a balanced approach that supports both chip manufacturers and suppliers. The decision on including polysilicon producers in the tax credit scheme will have far-reaching implications for America's position in the semiconductor industry.
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By: Christine Mui
Title: The Impact of the 2022 CHIPS Act on Hemlock Semiconductor and the US Microchip Industry
Sourced From: www.politico.com/news/2024/02/20/semiconductor-suppliers-chips-plan-biden-00142020
Published Date: Tue, 20 Feb 2024 05:00:00 EST
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