The Treasury Department has issued final regulations extending the reach of a 25% investment tax credit for semiconductor manufacturing projects to include a wider range of companies, including producers of solar ingots and wafers used in photovoltaic panels.
The new rules for the Advanced Manufacturing Investment Credit created under the CHIPS and Science Act cover not only companies that produce final manufactured semiconductors, but also chip and chip manufacturing equipment producers.
The rules also clarify that the tax credit applies to advanced manufacturing facilities and equipment that produce semiconductors, including the slicing, etching, and bonding of the semiconductor-grade polysilicon used in photovoltaics (PV) modules. The investment tax credit is available for facilities that begin construction before 2027.
“Treasury’s final rules will create new opportunities for solar manufacturers and encourage the upstream development of the solar supply chain,” Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association said in a statement on Tuesday.
“Supply chain accessibility and security remains one of our biggest challenges in the U.S. solar and storage industry,” Hopper said. “While the United States is a global leader in module manufacturing, we don’t have any ingot and wafer facilities in operation yet, representing a critical gap in the solar supply chain.”
Polysilicon wafers serve as the base of a solar cell and act as a semiconductor, creating the electrical current in a solar cell. To make the wafers, polysilicon is shaped into an ingot and then sliced to make wafers. The U.S. does not have ingot and wafer production in operation yet due to manufacturing complexities and the highly specialized equipment needed to create these facilities, making incentives an important part of the equation for wafer producers.
The Treasury Department said it adopted the expanded tax credit approach due to specific supply chain and national security considerations regarding the production of solar wafers. Currently, Chinese manufacturers produce nearly all of the world’s equipment for making solar panels, as well as most of the components, from wafers to special glass.
In a statement, the Treasury Department emphasized it is working with other federal agencies to “evaluate additional options to further the administration’s goal of incentivizing domestic production of the full solar supply chain.”
