US Announces Tax Credits For Ingots & Wafers Under CHIPS & Science Act

Vertical integration of the solar PV manufacturing industry just got a big boost from the US government as the Treasury Department’s recently released final rules for the Advanced Manufacturing Investment Credit (CHIPS ITC) include solar ingot and wafer production in its ambit under Section 48D.  

This provides 25% investment tax credit (ITC) for domestic production of semiconductors and semiconductor manufacturing, according to the Solar Energy Manufacturers for America (SEMA) Coalition.  

The association’s Executive Director Mike Carr said, “The final 48D rules will help solar manufacturers unlock the full potential of the CHIPS and Science Act by providing critical support for efforts to reshore the entire solar supply chain. We applaud Treasury’s final CHIPS ITC rules, which clarify that domestic solar ingot and wafer manufacturers can access this landmark incentive.”   

Referred to as the CHIPS and Science Act, it provides $52.7 billion for American semiconductor research, development, manufacturing and workforce development. Semiconductors are the major focus of governments all over the world as these little microchips are used in several modern electronics including smartphones, laptops, automobiles, and even medical devices. Semiconductor composition includes silicon, which is a significant component of p-type and n-type solar PV cells.  

Local manufacturing of these semiconductors ensures an uninterrupted supply of these critical components for continued economic development, in the face of growing geopolitical conflicts in the world. According to The White House, this will help strengthen the country’s supply chains and counter China. Within 2 years of its passing in August 2022, the Act has mobilized over $300 billion in private investment.  

In its final rules, the Treasury Department has now defined semiconductor wafer production to include “the processes of growing single-crystal ingots and boules, wafer slicing, etching and polishing, bonding, cleaning, epitaxial deposition, and metrology.” 

It explains that, “The CHIPS ITC is generally equal to 25% of the basis of any qualified property that is part of an eligible taxpayer’s advanced manufacturing facility if the qualified property is placed in service after December 31, 2022, and covers construction occurring after the enactment of the CHIPS and Science Act on August 9, 2022.” These regulations come into effect from December 23, 2024.  

According to ROTH MKM’s Philip Shen, the credit is additive to 45X. It will be available to facilities that enter construction before 2027 and does not preclude facilities from qualifying for other applicable tax credits.  

The Treasury Department quoted the US National Economic Advisor Lael Brainard to stress that this final guidance provides critical certainty for semiconductor and solar manufacturers to make generational investments in communities across the country. 

Additionally, the administration is also evaluating additional options to further its goal of incentivizing domestic production of the full solar supply chain, including solar wafers.  

Welcoming the development, Solar Energy Industries Association (SEIA) President and CEO Abigail Ross Hopper said this federal incentive helps fill a critical gap in the solar supply chain. For the other components of the PV value chain, the US is already offering attractive tax credits under the Inflation Reduction Act (IRA).   

As per the SEIA, 61 new solar and storage manufacturing facilities have come online because of federal manufacturing incentives and 45 are under active construction.  

According to the SEIA’s Solar & Storage Supply Chain Dashboard, the country’s current operational, under construction, and announced solar module supply chain capacity stands at 42 GW for polysilicon, 13.3 GW ingots, 24.3 GW wafers, 42 GW cells, and 82.4 GW modules. Of this, operational capacity is 34 GW for polysilicon and 45.1 GW for modules. For ingots, wafers and cells, the country has no operational production capacity as yet.  

The lack of capital and a drop in wafer prices prompted CubicPV to scrap its plans for a 10 GW silicon mono wafer fab in the US in February this year (see CubicPV Shelves 10 GW US Solar Wafer Manufacturing Plans).  

Nevertheless, Hanwha Qcells is investing KRW 3.2 trillion to build a solar hub in Georgia to produce solar ingots, wafers, cells and modules with 3.3 GW capacity as part of its plans to expand its US production capacity to 8.4 GW (see Hanwha Solutions Planning 8.4 GW US Production Capacity). 

German silicon solar wafer manufacturer NexWafe GmbH established a new US subsidiary earlier in January 2024 to explore the development of 6 GW production capacity (see US Market To Get German Solar Wafer Technology).  

Meanwhile, hyper-pure polysilicon producer for semiconductor and solar grade silicon Hemlock Semiconductor (HSC) has landed $325 million from the US Department of Commerce under the CHIPS and Science Act to expand its capacity of semiconductor-grade polysilicon.  

Hopper stated, “We commend Treasury for taking a thoughtful approach to industrial policy, helping to revitalize our communities with great-paying manufacturing jobs and boost our energy independence. This is a win-win for businesses and our economy and will continue the manufacturing renaissance in America for years to come.”