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Illinois Manufacturers’ Association Calls for Incentives to Increase Semiconductor and Microchip Production Amid Shortage

FOR IMMEDIATE RELEASE
February 9, 2022

Illinois Manufacturers’ Association Calls for Incentives to Increase Semiconductor and Microchip Production Amid Shortage

SPRINGFIELD – The Illinois Manufacturers’ Association (IMA) is backing 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, the legislation would provide various tax incentives for high-tech manufacturers of semiconductors, microchips, and their component parts, subject to an agreement with the Department of Commerce and Economic Opportunity. The proposal has garnered bipartisan support, with separate but identical bills filed by Rep. Tim Butler, R-Springfield, and Sen. Suzy Glowiak Hilton, D-Western Springs. The Senate version of the legislation, SB 3917, is scheduled to be heard in the Senate Revenue Committee this afternoon.

“If the pandemic has taught us anything, it’s the need for a strong American manufacturing sector including strengthening supply chains. This is particularly true for specialized technological components like semiconductors and microchips, which are vital components of 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 look forward to working with legislators to pass these incentives and bring 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, and experts warn that the shortage could bring 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 would be unavailable.

“The United States depends on microchip imports to fulfill local needs,” said State Senator 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.”

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 percent 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.

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/.

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