SPRINGFIELD, Ill. – The Illinois Manufacturers’ Association (IMA) applauds Senate passage of legislation to incentivize the in-state production of semiconductors, microchips, and their component parts amid a nationwide shortage that is impacting the availability of goods ranging from automobiles to cell phones.
Named the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act, SB 3917 would provide various tax incentives for high-tech manufacturers of semiconductors, microchips, and their component parts, subject to an agreement with the Illinois Department of Commerce and Economic Opportunity.
“Supply chain disruptions caused by the pandemic underscore the need to invest in American manufacturing to prevent over-reliance on overseas producers. This is particularly true for specialized technological components like semiconductors and microchips, which are used in thousands of everyday products,” said Mark Denzler, president & CEO of the Illinois Manufacturers’ Association. “Because of our state’s highly educated workforce, access to energy and water, and centralized distribution location, Illinois is uniquely positioned to host the manufacturing of these important products. We thank lawmakers for their bipartisan support of this legislation, especially sponsors Sen. Suzy Glowiak Hilton and Rep. Tim Butler, and look forward to bringing more critical manufacturing jobs to Illinois.”
This effort comes as the national and global economy face multiple supply chain crises caused by the coronavirus pandemic. The U.S. Department of Commerce reported recently that the nation’s supply of semiconductors is alarmingly low, with shortages bringing factory floors to a grinding halt as parts needed to complete production of everything from airplanes and automobiles to household products like laptops and telephones are unavailable.
Structured similarly to the recently created Reimagining Electric Vehicles (REV) Illinois Program, the legislation creates a three-tiered system of incentives for large chip manufacturers, component manufacturers or companies that may convert their facilities.
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. To qualify, companies must meet diversity reporting requirements about their workforce and board of directors, outline a hiring plan and commitments to recruit and hire from underserved areas, and pay employees equal to or greater than 120% of the average wage paid to full-time employees where the project is located.
Efforts are also underway at the national level to increase American chip manufacturing, as Congress is working with President Biden’s administration to negotiate a bill to provide more than $50 billion to increase production. Gov. JB Pritzker recently signed a letter along with 21 other governors encouraging congressional leaders to reach an agreement on the package to prevent further wage losses, higher prices and product shortages caused by the lack of supply.
About the Illinois Manufacturers’ Association (IMA)
The Illinois Manufacturers’ Association is the only statewide association dedicated exclusively to advocating, promoting and strengthening the manufacturing sector in Illinois. The IMA is the oldest and largest state manufacturing trade association in the United States, representing nearly 4,000 companies and facilities. For more information, please visit http://ima-net.org/.