State credit and incentive programs for semiconductor ancillary suppliers

As the U.S. semiconductor industry expands under the CHIPS and Science Act, states are racing to attract not only large chip manufacturers but also the ancillary suppliers that make these operations possible. Equipment makers, material providers, logistics firms, testing, and packaging companies all form an essential part of the semiconductor ecosystem, and many state incentive programs recognize this.

This article highlights the top ten U.S. states offering semiconductor-related incentives including supplier eligibility and outlines additional credit and incentive programs that ancillary suppliers should consider when evaluating expansion or relocation opportunities.

The expanding role of suppliers

A company does not need to manufacture semiconductor chips directly to qualify for many of the available incentives. States are increasingly understanding that suppliers providing materials, components, equipment, cleanroom technology, packaging and testing services are vital to strengthening the U.S. semiconductor supply chain.

Supplier-specific provisions are now included in several state laws and incentive packages, enabling ancillary companies to qualify for investment tax credits, job creation incentives and sales or property tax exemptions that were previously reserved for primary chip fabricators.

Top 10 states supporting semiconductor and supplier projects

1. Arizona

Through the Arizona Commerce Authority, suppliers involved in equipment, materials and advanced manufacturing processes are eligible for infrastructure support, job credits and manufacturing exemptions.

2. Texas

The Texas Semiconductor Innovation Fund (TSIF) supports both fabrication facilities and suppliers providing manufacturing equipment, raw materials or cleanroom components.

3. New York

The Green CHIPS Program offers credits for semiconductor and “related equipment and material supplier” sectors, including R&D and wage-based incentives.

4. Illinois

The Manufacturing Illinois Chips for Real Opportunity (MICRO) Act extends incentives to component and parts manufacturers, benefiting supply chain firms.