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Illinois Manufacturers Applaud New Law to Incentivize In-State Production of Microchips and Semiconductors

FOR IMMEDIATE RELEASE
April 19, 2022

Illinois Manufacturers Applaud New Law to Incentivize In-State Production of Microchips and Semiconductors

MICRO Act aims to reduce supply shortages of critical components, create jobs in Illinois

SPRINGFIELD – The Illinois Manufacturers’ Association (IMA) commends Governor J. B. Pritzker for signing a measure into law that aims to incentivize the in-state production of semiconductors, microchips, and their component parts amid a global 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 measure is included in the state’s newly enacted FY2023 budget and provides 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. The law is aligned with President Biden’s renewed efforts to provide over $50 billion in additional federal funds to expand American manufacturing and rebuild supply chains.

“Now more than ever it’s critical we invest in American manufacturing to prevent over-reliance on producers abroad. 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 the governor and lawmakers for their bipartisan support of this legislation, especially sponsors Sen. Suzy Glowiak Hilton, Rep. Michael Halpin and Rep. Tim Butler, and look forward to bringing more critical manufacturing jobs to Illinois.”

As the national and global economy faces multiple supply chain crises caused by the coronavirus pandemic, the new law would attract chip manufacturing plants to Illinois and eventually help ease supply pressures. 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 law creates a three-tiered system of incentives for large chip manufacturers, component manufacturers, or companies that may convert their facilities.

The new law would provide qualifying manufacturers with 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.

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 https://ima-net.org/.

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