… a rift is emerging within the chip industry itself, with some players concerned the final language of the legislation could provide disproportionate support to manufacturers like Intel while doing little to support other chip makers like Advanced Micro Devices Inc , Qualcomm Inc (QCOM.O) and Nvidia Corp (NVDA.O).
Intel, along with firms like Texas Instruments (TXN.O) and Micron Technology Inc (MU.O), designs and manufacturers its own chips. Such firms would benefit from the $52 billion in CHIPS Act subsidies to build factories and also from an investment tax credit to purchase tools for use inside their factories from another measure called the FABS Act.
AMD, Qualcomm and Nvidia design their own chips but tap partners to fabricate them and would see no direct benefit from subsidies to build plants or tax support for tools.
They support a separate version of the FABS Act introduced in the U.S. House of Representatives that contains both the manufacturing tax credit and a tax credit for chip design activities that would directly benefit them.
That version of the FABS Act - which is more pleasing to a broader swather of chip industry players - is also the one the Semiconductor Industry Association, which represents U.S. chip firms, has called on lawmakers to pass.
“We’re encouraged that the legislation is progressing, and we continue to support enactment of $52 billion in CHIPS Act investments and a FABS Act investment tax credit for both manufacturing and design," the association said in a statement on Friday.
The current Senate legislation contains no design tax credit. That has prompted some U.S. chip companies, which asked not to be named for fear of industry and government blowback, to debate opposing the Senate bill if the final language that comes to the floor has no tax credit for design activities, two people familiar with matter said.
“You have Intel that might get $20 billion with CHIPS Act plus $5 billion or $10 billion under the FABS Act. So $30 billion goes to your direct competitor, and you don’t get a penny? That’s going to cause problems in the market,” said one person at a company debating opposition to the bill, speaking on condition of anonymity because the person was not authorized to talk to the press.