The Semiconductor Industry Association and 17 allied trade groups sent a formal letter to Congress on May 12 urging lawmakers to extend the Advanced Manufacturing Investment Credit (AMIC) — the Section 48D tax credit that has helped anchor $640 billion in announced domestic chip investment — before its December 31, 2026 construction deadline expires and puts hundreds of billions of dollars in planned U.S. fab capacity at risk. For American consumers and workers, the stakes are concrete: the credit is the primary policy lever keeping semiconductor factories — and the jobs and supply-chain resilience they generate — on U.S. soil rather than in Taiwan, South Korea, or China.
The push comes days after the SIA reported that global chip sales hit $298.5 billion in Q1 2026 — a 25 percent quarter-over-quarter surge driven almost entirely by AI infrastructure spending — placing the industry on track for what Gartner projects will be a $1.3 trillion year. That booming demand is landing at the exact moment several multi-billion-dollar U.S. fabs are mid-construction and most vulnerable to a policy lapse.
The OBBBA Raised the Credit to 35% — But Left the December Deadline Unchanged
Congress already acted once on the AMIC: the One Big Beautiful Bill Act, signed into law on July 4, 2025, raised the credit from 25 percent to 35 percent for facilities placed in service after December 31, 2025. But that legislation left the underlying construction deadline — December 31, 2026 — unchanged. Any fab that does not break ground by that date cannot claim the credit at all, regardless of what it costs to build or how long it takes to complete.
That hard stop is what the SIA coalition is now pressing Congress to remove. The coalition's May 12 letter calls for extending the credit deadline beyond 2026 so that companies evaluating whether to launch projects in the months ahead are not forced to make billion-dollar decisions under a year-end gun. The letter also calls for expanding the credit to cover semiconductor design and R&D activities through the separately introduced STAR Act — a recognition that U.S. companies hold roughly half of global chip design revenue but face rapidly intensifying competition from government-backed design programs in India, South Korea, and elsewhere.
"To be the world's economic, technology, and security leader, America must lead the world in semiconductors," SIA President and CEO John Neuffer said in a statement. "The Advanced Manufacturing Investment Credit has been a major driver of America's recent semiconductor resurgence, and it's critical policymakers act now to build on that momentum."
A July 1 Tariff Report Could Reshape the Cost Equation Before Congress Acts
Layered on top of the credit deadline is a second, converging pressure point. Under Presidential Proclamation 11002, signed January 14, 2026 and imposing a 25 percent tariff on certain advanced computing chips including the NVIDIA H200 and AMD MI325X, the Commerce Department is required to deliver a report on the data-center semiconductor market to President Trump by July 1, 2026. That report may trigger the administration to impose broader, "significant" Phase 2 tariffs on a wider range of chips and equipment — a move that could dramatically alter the cost structure for AI chip supply chains and accelerate or complicate domestic fab investment decisions simultaneously.
The convergence of the July 1 tariff review and the year-end credit deadline means that companies weighing whether to break ground on new U.S. fab capacity face simultaneous uncertainty on both the incentive and the cost side of their business cases — the worst possible climate for decade-long capital commitments.
What Happens to AI Infrastructure, Jobs, and Chip Prices If the Deadline Lapses
Building a semiconductor fab in the United States costs at least 30 percent more than in Taiwan, South Korea, or Singapore, and up to 50 percent more than in China. Between 40 and 70 percent of that gap is attributable to competing governments' incentive regimes. Before the CHIPS Act, the United States was on track to capture only 9 percent of global semiconductor capital expenditure through 2032; with the AMIC in place, that projection rises to 28 percent, according to SIA and Boston Consulting Group analysis.
The facilities currently under construction or expansion — including TSMC's Arizona complex, Intel's Fab 52 and Fab 62 in Ohio, and Samsung's Taylor, Texas facility — carry decade-long timelines and price tags in the tens of billions of dollars. A lapse in the credit injects legal and financial uncertainty into investment decisions that are difficult or impossible to reverse once paused. The SIA has documented $640 billion in announced investments across 140 projects in 30 states; those jobs and supply-chain links are what disappears if new projects stop breaking ground.
For consumers, the downstream stakes involve the price and availability of the AI infrastructure that increasingly underlies cloud services, health care tools, and everyday devices. With Deloitte projecting AI chips alone will account for roughly $500 billion — more than half of 2026 global semiconductor revenue — supply-chain concentration in a handful of foreign facilities is not an abstraction. A manufacturing disruption, a geopolitical shock, or simply a cost spiral from inadequate domestic capacity translates directly into higher prices and longer waits for everything from data-center capacity to consumer electronics.
Critics: Taxpayers Are Funding Buybacks While Workers Bear the Risk
The SIA's push for extension faces a genuine and documented counter-argument: CHIPS Act incentives have benefited companies that simultaneously rewarded shareholders rather than workers. GlobalFoundries, which received up to $1.5 billion in CHIPS Act funding, announced $500 million in share buybacks in 2026 — after hitting its first two program milestones. Intel, which received the program's largest award of approximately $7.8 billion and then accepted an $8.9 billion government equity stake, laid off more than 15,000 employees in 2024 alone while the fab investments it pledged continued to be built. A 2025 Senate Banking Committee letter to Commerce explicitly cited Intel's ongoing shareholder dividend commitments — made even as layoffs proceeded — as evidence that the program's accountability guardrails were insufficient.
The libertarian group Americans for Prosperity has argued that the CHIPS Act subsidies are "unnecessary corporate welfare" because commercial and security incentives already push semiconductor companies toward domestic investment, and that the credit's uncapped structure allows costs to balloon well beyond projections. The Peterson Institute for International Economics has noted that the AMIC's costs could exceed $73 billion — three times the Congressional Budget Office's initial $24.25 billion estimate — precisely because there is no cap and any qualifying project can claim it.
Industry defenders counter that the cost differential between U.S. and Asian fabs is structural and does not self-correct without sustained incentives, and that the global competition for leading-edge manufacturing capacity is too consequential for national security to leave to market forces alone. "Given the risk of tariffs, increasing manufacturing in the U.S. remains a key consideration for these large semiconductor companies," Daniel Newman, CEO of the Futurum Group, told CNBC. "The tax credits could be seen as an opportunity to offset certain costs related to U.S.-based projects."
The accountability gap, however, remains real. CHIPS Communities United, a coalition of labor and environmental groups tracking the program, has described the CHIPS Act's approach as handing out "public money to private corporations and hoping for the best," arguing that workers and communities have been cut out of meaningful governance over how the money is used. The SIA has not addressed that critique in its May 2026 extension push.
The Construction Deadline Is the Deciding Variable for Projects Not Yet Launched
Extending the deadline matters most for projects that have not yet broken ground. Under current law, any fab whose construction does not commence by December 31, 2026, is ineligible for the 35 percent credit regardless of how much it costs or how long it takes to complete. Companies already under construction — including TSMC's Arizona complex, which delayed its opening from 2026 to 2028 amid labor and training disputes before TSMC pledged an additional $100 billion in Arizona investment in March 2025 — can continue to claim credits for ongoing work. The question is whether a second wave of projects, from companies evaluating entirely new facilities, will launch at all if Congress does not signal that the incentive framework will persist.
TSMC's Arizona experience also illustrates the tensions that accompany domestic fab construction at scale. The Arizona Building and Construction Trades Council previously asked Congress to block visas for 500 Taiwanese workers after TSMC sought to use experienced technicians from Taiwan to train local staff — a move U.S. unions characterized as disrespecting American workers. The project also faced documented delays related to allegations of wage theft and the non-hiring of unionized subcontractors. Those disputes were resolved through a 2023 agreement, but they illustrate that the challenge of domestic chip manufacturing is not only financial.
What Readers, Workers, and Policymakers Can Do With This Information Now
For workers and communities in the 30 states that host CHIPS Act projects, the coming months are the window to press lawmakers on the conditions attached to any extension. The current extension push from the SIA does not include calls for stronger antiĐbuyback restrictions, job-retention requirements, or community benefit agreements — protections that critics say should accompany any renewal of public incentives. State-level semiconductor investment, particularly in Arizona, Ohio, and Texas, is contingent on federal credit viability; those state legislators and governors are direct pressure points for constituents who want to see accountability conditions added.
For companies evaluating whether to break ground on new fab facilities before December 31, 2026, the legislative calendar is the operative risk variable. The Senate reconciliation process, which is the most plausible vehicle for a standalone extension, has no confirmed timeline. Every week of legislative inaction compresses the runway for construction planning that takes months to mobilize.
Whether the December 2026 deadline is extended — and whether any extension comes with stronger worker and taxpayer protections — will be among the most consequential semiconductor policy decisions made in the United States this year. The SIA's coalition has made its case. The documented record of how prior subsidies were used gives Congress both the justification and the political cover to demand more in return.
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