^{A bare wafer stacker sorts silicon wafers at a Micron Technology facility in Boise, Idaho. | Photographer: Kyle Green/Bloomberg}

In a major move aimed at strengthening America’s semiconductor sector, the U.S. Senate has approved a fresh round of tax incentives under President Donald Trump’s “big, beautiful bill.” The latest legislation increases the investment tax credit for chip manufacturers from 25% to 35%, a significant leap designed to further accelerate domestic semiconductor production.

This enhanced credit rate exceeds previous proposals, including the 30% outlined in earlier drafts, and builds on provisions from the 2022 CHIPS and Science Act. That legislation had already allocated $39 billion in federal grants and $75 billion in low-interest loans to jumpstart semiconductor facilities on U.S. soil.

What’s in the Bill?

Under this newly passed version of Trump’s bill, eligible chipmakers that expand advanced manufacturing within the U.S. before 2026 can now claim up to 35% in tax credits. Industry giants such as Intel, Taiwan Semiconductor Manufacturing Company (TSMC), Micron Technology, and others with active or planned U.S. projects stand to benefit.

According to policy analysts, this move not only reduces capital expenditure for companies but also ensures faster timelines for factory buildouts—an urgent need amid global supply chain realignments.

The bill, however, still requires House approval. Although the House narrowly passed its own version earlier this year, final reconciliation is pending. Trump has publicly urged lawmakers to finalize the bill by July 4.

A Different Approach from the Biden Era

Trump’s current legislation echoes elements of the Biden administration’s CHIPS Act but shifts the strategy dramatically. Instead of relying primarily on grants and subsidies, Trump favors tax breaks and tariff-driven pressure to achieve reshoring.

Earlier this year, Trump even called for a repeal of the CHIPS Act altogether. Despite that, key Republican lawmakers have not yet acted on that suggestion. U.S. Commerce Secretary Howard Lutnick recently revealed that portions of Biden’s semiconductor grants are being renegotiated under the new administration.

Meanwhile, Trump has ordered an active investigation into semiconductor imports, potentially leading to fresh tariffs on chips and related technologies—a move that could redefine sourcing strategies across the global electronics industry.

Industry Response and Growing Investments

Industry leaders appear to be responding proactively. TSMC, the world’s largest contract chipmaker, is doubling down on its Arizona investment, which is projected to exceed $40 billion across multiple phases. U.S. tech leaders like Nvidia, GlobalFoundries, and Micron have also announced billions in new funding to expand fabrication capacity on American soil.

Daniel Newman, CEO of Futurum Group, a leading tech research firm, noted that the looming threat of tariffs is already influencing corporate decisions.

“Given the risk of tariffs, increasing manufacturing in the U.S. remains a key consideration for these large semiconductor companies,” Newman told CNBC. “The tax credits could serve as a much-needed cushion to offset the substantial costs tied to U.S.-based production.”

Why It Matters

With the global chip race intensifying and U.S.–China tech tensions still high, this tax push marks a defining moment in America’s bid to reclaim semiconductor leadership. While the legislation faces hurdles before becoming law, the 35% credit proposal is already reshaping boardroom strategies—and potentially altering the future of the world’s most critical tech supply chain.

If the bill clears its final legislative barrier, it could catalyze the largest wave of chip investments in the U.S. since the early 2000s, positioning the country as a key hub in the post-globalization semiconductor era.