The CHIPS Act’s semiconductor production credit
- The credit, under Sec. 48D, equals 25% of qualified investment in new buildings, facilities, and other depreciable tangible property integral to the operation of a facility to manufacture semiconductors or semiconductor manufacturing equipment. Because taxpayers may elect to be treated as making payments against tax equal to the credit amount, the credit is in effect refundable.
- Qualified property eligible for the credit must be placed in service after 2022, and its construction must begin before Jan. 1, 2027.
- An advanced manufacturing facility for purposes of the credit must have as its primary purpose the manufacturing of semiconductors or semiconductor manufacturing equipment. Certain “foreign entities of concern” or taxpayers making certain “applicable transactions” are ineligible for the credit. The latter include certain transactions involving a material expansion of semiconductor manufacturing capacity in certain “foreign countries of concern.”