U.S. Moves To Bring Chip Materials Into the CHIPS Act Tax Credit Net

• The SEMI Investment Act extends the 35% Advanced Manufacturing Tax Credit to U.S. producers of semiconductor materials.
• Materials now eligible include wafers, substrates, thin films, lithography chemicals, specialty gases, and process chemicals.
• The bill addresses U.S. dependence on foreign suppliers, particularly China, for critical chip-making materials.

The U.S. House of Representatives has introduced the SEMI Investment Act to strengthen the domestic semiconductor supply chain by supporting the materials that make chip production possible. While recent U.S. incentives have focused on building advanced fabrication plants, critical upstream materials including substrates, wafers, thin films, photoresists, and process chemicals have remained heavily reliant on foreign suppliers. The SEMI Investment Act aims to close this gap and provide long-term visibility for domestic materials production.

If passed, the legislation would extend the 35% Advanced Manufacturing Tax Credit, originally established under the CHIPS and Science Act of 2022, to U.S. producers of semiconductor materials going beyond chips and equipment to include the full range of essential semiconductor production materials, such as silicon, silicon carbide, gallium nitride, wafers, lithography photoresists, etchants, and specialized gases.

Why U.S. Semiconductor Materials Are in the Spotlight

U.S. policymakers and industry groups have repeatedly warned that America’s reliance on overseas suppliers for upstream semiconductor materials poses a major supply-chain risk. Key dependencies include:

• Wafers and substrates for silicon and compound semiconductors (SiC, GaN, GaAs, InP)
• Thin films and deposition materials critical for chip layers
• Lithography materials such as photoresists, developers, masks, and pellicles
• Specialized gases and chemicals used in etching, cleaning, and chamber processes

Sponsors of the bill describe this legislation as “the final missing link” in building a fully domestic semiconductor ecosystem, with the goal of reducing reliance on foreign supply chains, minimizing geopolitical risk, and supporting industries where materials shortages can disrupt production, including defense, aerospace, automotive, and industrial manufacturing.

How the SEMI Investment Act Works

The bill would amend Section 48D of the U.S. tax code to treat semiconductor materials facilities as advanced manufacturing facilities eligible for the 35% tax credit. This credit would cover both direct production materials like wafers, substrates, packaging materials, and thin films and indirect production materials essential for manufacturing, including CMP slurries, cleaning agents, lithography chemicals, and specialty gases.

The U.S. Treasury Department would also maintain an official, regularly updated list of qualifying materials, allowing companies to petition for inclusion of additional materials not initially covered. This ensures clarity for manufacturers and long-term planning security for investors considering greenfield plants or facility expansions in the U.S.

Industry Support Signals Investment Opportunity

The SEMI Investment Act has garnered broad support across the semiconductor ecosystem. SEMI, the global industry association, says the bill will help keep upstream materials production and jobs in the U.S.. The American Chemistry Council emphasizes that hundreds of specialized chemicals are required for modern chipmaking, and supporting domestic production is essential to long-term resilience. The Compressed Gas Association and other supplier groups also back the legislation, highlighting the need for a strong domestic supply of gases and process materials.

For companies in the semiconductor value chain, this backing signals a potential investment window as policymakers prioritize a fully domestic stack, from materials to final chip assembly.

Next Steps and Outlook

H.R. 6055 has been referred to the House Ways and Means Committee and will need approval from both chambers to become law. Its Senate counterpart, S. 1642, is already pending in the Senate Finance Committee. In the meantime, materials suppliers, fab owners, and downstream manufacturers should monitor the bill closely, identify projects that could qualify, and consider how a stronger U.S. materials base could reshape sourcing strategies over the next 5–10 years.

IBS Electronics will continue tracking the SEMI Investment Act and broader CHIPS Act developments to help customers understand the evolving supply-chain implications.