HR6055-119

What This Bill Does

The SEMI Investment Act amends Internal Revenue Code section 48D. It broadens advanced manufacturing facility to cover facilities whose primary purpose is manufacturing semiconductors, semiconductor manufacturing equipment, or semiconductor materials. Semiconductor materials include direct production materials physically incorporated into finished semiconductors, such as silicon, silicon carbide, gallium nitride, gallium arsenide, indium phosphide, thin-film and layering materials, packaging substrates, wire bonds, solder bumps, lead frames, die attach adhesives, and underfill. They also include specialized indirect production materials used in production, testing, inspection, or packaging but not physically incorporated into a finished semiconductor, such as etchants, deposition precursors, doping gases, photoresists, developers, masks, pellicles, CMP slurries and pads, cleaning agents, probe cards, test sockets, optical inspection materials, mold compounds, encapsulants, bonding wires, chemical-handling and wafer-handling materials, and process chamber materials. Generic materials predominantly used outside semiconductor manufacturing are excluded. Within 180 days and annually thereafter, Treasury, in consultation with Commerce, must publish a list of qualifying direct and indirect production materials, and taxpayers may petition Treasury for interim determinations for materials not on the latest list. The bill extends the section 48D(e) construction deadline from December 31, 2026 to December 31, 2031.

Who Benefits and How

Semiconductor materials manufacturers benefit because facilities producing qualifying direct or indirect production materials can fall within the advanced manufacturing facility definition. Semiconductor manufacturing equipment producers benefit because equipment manufacturing facilities are expressly included. Semiconductor manufacturers benefit from stronger domestic supply chains for substrates, chemicals, photolithography materials, packaging materials, testing materials, handling materials, and chamber materials. Taxpayers developing new semiconductor inputs benefit from a petition process for Treasury determinations when a material is missing from the annual list. Domestic semiconductor supply-chain policy benefits because the credit deadline is extended through construction beginning before 2032.

Who Bears the Burden and How

Treasury tax administrators must define, list, update, and adjudicate semiconductor material eligibility for section 48D. Commerce must consult with Treasury on qualifying material specifications, characteristics, and applications. Federal taxpayers bear additional tax-expenditure costs from expanding and extending the advanced manufacturing investment credit. Credit claimants must document that facilities and materials satisfy the direct-production or indirect-production material rules. Manufacturers of generic materials predominantly used outside semiconductor manufacturing are excluded from the expanded definition.

Key Provisions

• Expands advanced manufacturing facility to include semiconductor manufacturing equipment and semiconductor materials facilities.
• Defines direct production materials physically incorporated into finished semiconductors.
• Defines indirect production materials used in semiconductor production, testing, inspection, or packaging.
• Excludes generic materials predominantly used outside semiconductor manufacturing.
• Requires Treasury, in consultation with Commerce, to publish annual qualifying-material lists and process taxpayer petitions.
• Extends the section 48D construction deadline from December 31, 2026 to December 31, 2031.