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Chipmakers welcome US bill despite big benefits for Intel

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July 18 (Reuters) – Major U.S. chipmakers rallied on Monday to back a package of subsidies for the chip industry, despite earlier concerns that a bill awaiting Senate vote would disproportionately benefit makers like Intel Corp (INTC.O).

Senate Majority Leader Chuck Schumer told lawmakers that a reduced set of bills aimed at propping up the US computer chip industry could be voted on as early as Tuesday after Democratic lawmakers split them from a larger and more controversial bill.

The bills aim to make the US more competitive with a rising China, whose chip industry has grown rapidly over the past five years and accounts for almost 10% of global sales.

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The measures include $52 billion in subsidies and an investment tax credit to boost U.S. manufacturing. The bills have bipartisan support. Powerful Republican Senator John Cornyn tweeted Sunday that the bill’s consideration has been “green-lit” after Democrats slashed their ambitions for unrelated spending bills.

But last week the chip industry itself was split, with some players worried that the final bill would disproportionately support manufacturers like Intel while doing little to support chip developers like Advanced Micro Devices Inc (AMD. Oh, Qualcomm. Inc (QCOM.O) and Nvidia Corp (NVDA.O).

Intel, along with companies such as Texas Instruments (TXN.O) and Micron Technology Inc (MU.O), designs and manufactures its own chips. Such firms will benefit from $52 billion in subsidies under the CHIPS Act to build factories, as well as an investment tax credit to buy tools to use in their factories under another measure called the FABS Act.

Intel earlier this year said it would spend $20 billion on the Ohio plant after laying the groundwork for two new plants in Arizona last year. read more

AMD, Qualcomm and Nvidia are developing their own chips, but are bringing in partners to manufacture them and see no direct benefit from subsidies to build factories or tax support for tools.

They support a separate version of the FABS Act introduced by the US House of Representatives that contains both a manufacturing tax credit and a tax credit for chip design activities that can directly benefit them.

This version of the FABS Act, which appeals more to the wider chip industry, is also the version that the Semiconductor Industry Association, which represents American chip manufacturers, has urged lawmakers to pass.

“We are encouraged that the legislation is moving forward and we continue to support the passage of $52 billion in CHIPS investment and FABS investment tax credit for both manufacturing and design,” the association said in a statement Friday.

The current legislation of the Senate does not provide for a tax benefit under the model. A SIA spokesman said on Monday that major chip design companies have told the association they have no plans to oppose the bill on the issue. An AMD spokesperson on Monday said the company supports the current legislation.

Nvidia declined to comment, and Qualcomm and Intel did not respond to requests for comment.

The lack of a tax credit for chip design has prompted some US companies, which have asked not to be named for fear of backlash from industry and government, to discuss their support for the Senate bill if the final text to be presented in the room does not have a tax credit. for project activities, two people familiar with the matter said.

“You have Intel that can get $20 billion under the CHIPS Act plus $5 or $10 billion under the FABS Act. So $30 billion goes to your direct competitor and you don’t get a dime? This will cause problems in the market. “said one person at the company, who discussed their position on the bill, on condition of anonymity because the person was not authorized to speak to the press.

“It will only benefit a few companies,” said a spokesperson for a second company, which discussed its support for the bill without copyright on the design but was not authorized to speak to the press.

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Reporting by Stephen Nellis in San Francisco; Editing Leslie Adler

Our Standards: Thomson Reuters Trust Principles.

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