The passing of House Bill 2428 in Washington state is seen as a positive step towards supporting the semiconductor industry and potentially unlocking more federal funding through the CHIPS Act. This bill extended two tax preferences for the semiconductor industry, reinstated six others, and will provide predictability for companies until 2034. The goal is to keep the U.S. competitive in the semiconductor industry against countries like China.
Washington state faces challenges in directly investing in the semiconductor industry due to state laws prohibiting gifts of funds to private businesses. To compete for CHIPS Act funds, states must demonstrate a local match, with tax relief dollars serving as a match for Washington. Other states like Arizona and Indiana have seen success in attracting semiconductor companies through state and federal tax benefits, creating jobs and economic growth.
The relaxed B&O and sales and use taxes in Washington could attract new business to the semiconductor industry. However, the main benefit will be to support the existing industry, such as companies like TSMC Washington and SEH America in Clark County. The reinstatement and extension of tax preferences are expected to help these companies expand and modernize their operations, potentially attracting more CHIPS funding to the region.
The bill requires a combined $500 million investment from semiconductor manufacturers to qualify for the tax preferences. This threshold aligns with the scale of industry players in Clark County, making it easier for companies to meet the requirements and benefit from the incentives. Washington state hopes that these measures will make it more attractive for additional CHIPS funding, alongside efforts in research and workforce development in universities like the University of Washington and Oregon State University.
Research efforts in the Pacific Northwest, such as the study of conductive properties by PhD students at Washington State University’s Vancouver campus, are also contributing to the semiconductor industry. For example, the research on organic material as a replacement for silicon in computers could lead to faster and cleaner computing processes. Overall, the tax preferences are just one tool among many that Washington state has to support the semiconductor industry and unlock potential federal funding through the CHIPS Act.
