Amid Global Chip Shortage, Legislation Introduced to Provide Incentives for Chip Manufacturers to Convert Facilities in Illinois

Chip on a circuit board (PHOTO CREDIT: Samuel Faber)
Chip on a circuit board (PHOTO CREDIT: Samuel Faber).

By Kevin Bessler | The Center Square

(The Center Square) – Amid a global shortage, legislation is being introduced to try to get Illinois into the microchip manufacturing ring.

Named the Manufacturing Illinois Chips for Real Opportunity or MICRO Act, the legislation in Senate Bill 3917 and House Bill 4634 would provide various tax incentives for high-tech manufacturers of microchips. Structured like the Reimagining Electric Vehicles (REV) Illinois program, the legislation creates a three-tiered system of incentives for chip manufacturers and component manufacturers that may convert their facilities.

The U.S. Commerce Department says a survey of semiconductor chip producers shows a shortage will persist for the foreseeable future. Industry officials warn that the shortage could bring factories to a grinding halt as parts needed to complete production of everything from airplanes to cellphones would be unavailable.

“We are seeing across the country a number of facilities, including auto manufactures, that are shutting down because of a lack of a chip supply, so it’s in the nation’s interest and Illinois’ interest,” said Mark Denzler, president and CEO of the Illinois Manufacturers’ Association.

The proposal would provide qualifying manufacturers an enhanced version of the EDGE tax incentive over 15 years. Employers would receive a tax break on 75% of income tax withholdings attributable to new employees, which would increase to 100% if a production facility is located in an underserved area. Additional credit is available for employee training costs.

The proposal is getting bipartisan support, with separate but similar bills filed by state Rep. Tim Butler, R-Springfield, and state Sen. Suzy Glowiak-Hilton, D-Western Springs.

“With semiconductor supply chain and worker shortages intensified by the pandemic, we can use this opportunity to build the industry in Illinois and create job opportunities for residents,” Glowiak-Hilton said.

Denzler said Illinois has what it takes to be a prime location for chip makers.

“Two of the things that are critically important are access to energy and access to water, and we have both of those, so that would make Illinois, in my mind, a leader in a potential location,” Denzler said.



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