[Home](/)/[Resources](/resources)/CHIPS Act Manufacturing Incentives USIndustrial policy guide # CHIPS Act Incentives: What Electronics and Semiconductor Companies Need to Know The CHIPS and Science Act allocated $52.7 billion to rebuild US semiconductor manufacturing capacity, with a 25% investment tax credit for qualifying investments. For semiconductor manufacturers, the direct funding opportunity is significant — and the national security guardrails are equally significant. For downstream electronics hardware OEMs, the Act reshapes the medium-term landscape for chip supply access and allied-nation manufacturing strategy. Copy Link[Share on WhatsApp](https://wa.me/?text=https%3A%2F%2Fkrono-labs.com%2Fguides%2Fus-chips-act-manufacturing-incentives) At a glance Law CHIPS and Science Act (2022) Funding $52.7B total Manufacturing ITC 25% (Section 48D) China guardrail 10-year cap on China expansion ## CHIPS Act: structure and implications ### What the CHIPS and Science Act does The Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, signed in August 2022, appropriates approximately $52.7 billion for US semiconductor manufacturing, research, and workforce development. The largest allocation — $39 billion — funds the CHIPS for America programme, which provides grants, loans, and loan guarantees for semiconductor fabrication, packaging, and materials facilities in the United States. An additional 25% investment tax credit (ITC) is available for qualifying semiconductor manufacturing investments. ### Who qualifies for CHIPS incentives CHIPS incentives primarily target semiconductor manufacturers: companies building or expanding semiconductor fabrication, advanced packaging, or materials/equipment facilities in the US. This includes logic chip fabs (TSMC, Intel, Samsung announced major investments), memory manufacturers, legacy node fabs, and compound semiconductor producers. Downstream electronics OEMs are not direct recipients of manufacturing grants — the intended beneficiaries are the fabs that the electronics industry sources from, with the policy goal of diversifying supply away from Asia-concentrated production. ### National security guardrails CHIPS grant recipients must comply with significant national security restrictions: a 10-year prohibition on expanding semiconductor manufacturing capacity in China or other countries of concern beyond 5% of the recipient's capacity, with exceptions for legacy chips sold locally. Recipients cannot enter into joint research or technology licensing with foreign entities of concern. These guardrails are designed to prevent CHIPS funding from indirectly benefitting foreign semiconductor supply chains — and violations can trigger clawback of the entire grant. ### Implications for electronics hardware supply chains For electronics hardware companies that source chips rather than manufacture them, the CHIPS Act's main relevance is at the supply chain level: US CHIPS investments are intended to create more reliable domestic and allied-nation chip supply, potentially reducing exposure to Taiwan-strait geopolitical risk. Over the 5–10 year horizon of CHIPS-funded fab construction, electronics OEMs may have access to US-based or US-allied chip supply for certain node types. Some OEMs have entered preferred supplier agreements tied to announced CHIPS-funded fabs. ## Steps to assess CHIPS relevance for your company 01 Assess whether your company is a potential direct CHIPS programme applicant — if you operate or plan to build semiconductor manufacturing, packaging, or materials facilities in the US, evaluate whether you meet the criteria for CHIPS for America grants or the 25% ITC. 02 If you are a downstream electronics OEM (not a chip manufacturer), map your semiconductor supply chain against CHIPS-funded fabs: Intel, TSMC, Samsung, Micron, GlobalFoundries, and others have announced US expansion — understand which of your chip categories may be sourced from future US-based fabs. 03 Evaluate whether any of your company's existing or planned activities in China or other countries of concern could create exposure to CHIPS guardrails — if you are considering a CHIPS application, review all foreign semiconductor investments for compatibility with the 10-year restriction. 04 Monitor CHIPS Commerce programmes: the Department of Commerce (CHIPS Program Office) has issued multiple funding opportunity announcements for different stages and types of semiconductor facilities — subscribe to Commerce CHIPS updates at chips.gov. 05 Review the 25% CHIPS ITC (Section 48D tax credit) for semiconductor manufacturing equipment purchases — available to companies investing in qualifying semiconductor manufacturing facilities in the US, including some advanced packaging and materials companies. 06 Consider whether CHIPS-aligned supply chain positioning affects your company's attractiveness to investors or government customers — 'onshoring' and supply chain resilience are active themes in defence, aerospace, and critical infrastructure electronics procurement. 07 Track allied-nation equivalents: the EU CHIPS Act, the UK Semiconductor Strategy, Japan's semiconductor subsidies (RAPIDUS), and India's semiconductor incentives (PLI) are parallel policy programmes — companies with multi-geography manufacturing footprints should assess each. ## Frequently asked questions ### Can a non-US electronics company receive CHIPS Act grants? Yes — CHIPS for America grants are available to foreign-headquartered companies investing in US semiconductor manufacturing facilities. TSMC (Taiwan), Samsung (South Korea), and other foreign companies have received or applied for CHIPS grants for US fab construction. The requirement is that the investment and facility is in the United States — not that the recipient company is US-headquartered. National security vetting and guardrails apply to all recipients regardless of nationality. ### What is the 25% CHIPS Investment Tax Credit and how does it work? Section 48D of the Internal Revenue Code (added by the CHIPS Act) provides a 25% investment tax credit for qualified investments in advanced semiconductor manufacturing facilities in the US. Qualified property includes equipment used in semiconductor manufacturing, testing, and packaging. The credit can be claimed in the year the facility is placed in service. It applies to investments made after December 31, 2022, through 2026. The credit is significant — a $10B fab investment could generate $2.5B in tax credits. ### How does the CHIPS Act relate to export controls on semiconductors? The CHIPS Act incentives and the semiconductor export controls (Entity List additions, the October 2022 and subsequent semiconductor export control rules under EAR) are complementary but separate policy instruments. The export controls restrict what advanced chips and chip-making equipment can be sold to China; the CHIPS Act funds US domestic manufacturing capacity. Together they form a 'push-pull' industrial policy: restricting China's access to advanced chips while building US and allied production capacity. Electronics OEMs need to track both frameworks. ### Will CHIPS Act investments make US-made chips available to OEMs? The timeline for new CHIPS-funded fab capacity to come online is 3–7 years from investment decision — most announced fabs are targeting 2026–2028 for initial production. When online, they will primarily produce for the foundry's existing customer base (Apple, NVIDIA, AMD, etc.) and through foundry service agreements. Smaller electronics OEMs are unlikely to have direct access to leading-edge CHIPS-funded nodes, but legacy node and trailing-edge node investments (which are also CHIPS-funded) may create more accessible supply for industrial and embedded electronics. **Disclaimer:** Educational resource only. CHIPS programme details, funding opportunity announcements, and guardrail rules are subject to ongoing Commerce Department guidance. Consult a qualified US government contracting and trade specialist for application-specific advice. 🇺🇸 US roadmap for your product Every standard, document, and test that applies — free, no account required. See your free roadmap[ Want an expert to take your product through 🇺🇸 US compliance for you? One consultant from Krono's compliance team takes your product from requirements to legal sale, with a fixed quote before any work starts. See compliance services](/services) Related guides * [US UFLPA Electronics Supply ChainUS UFLPA for electronics: rebuttable presumption for Xinjiang-origin goods, CBTF-designated entities, CBP withhold-and-release orders, supply chain audit requirements, and what electronics importers must document to enter the US market.](/guides/us-uflpa-electronics-supply-chain) * [UK Critical Minerals StrategyUK Critical Minerals Strategy for electronics hardware: 18 priority minerals, British Geological Survey risk ratings, JETCO partnerships, and how the strategy shapes UK government procurement preferences for electronics supply chains.](/guides/uk-critical-minerals-strategy) * [Japan Economic Security Supply ChainJapan Economic Security Promotion Act (ESPA) 2022 for electronics: 11 critical goods categories including semiconductors and advanced electronics, supply chain survey obligations, patent secrecy orders, and stable supply designation implications for foreign hardware companies.](/guides/japan-economic-security-supply-chain) * [India DPIIT Startup RecognitionIndia DPIIT Startup India recognition for electronics hardware startups: Section 80-IAC income tax holiday, angel tax exemption under Section 56(2)(viib), 80% patent fee rebate, and eligibility criteria for hardware companies seeking DPIIT recognition.](/guides/india-dpiit-startup-recognition)