The CHIPS Act landscape changed significantly in 2026. The Section 48D Advanced Manufacturing Investment Credit increased from 25% to 35% for property placed in service after 2025 under the One Big Beautiful Bill (OBBB). The Commerce Department has allocated over $36 billion of the $50 billion appropriated, with Intel, TSMC, Samsung, Micron, and others now in active construction. The hard construction deadline of December 31, 2026 is approaching fast — projects that haven’t broken ground by year-end forfeit the tax credit entirely. This guide covers what manufacturers need to know about CHIPS Act incentives in 2026, including the enhanced tax credit, grant programs, eligibility requirements, and how to position a greenfield semiconductor facility for federal funding before the deadline. Schedule a greenfield consulting session to map your project against current CHIPS Act eligibility before construction starts.
2026 CHIPS Act Reference · Manufacturers’ Guide
CHIPS Act Incentives 2026: What Changed, Who Qualifies, How to Apply
The 35% enhanced tax credit, the December 2026 construction deadline, and the $36B+ in grants already allocated. This is the practical reference for U.S. manufacturers evaluating CHIPS Act funding for new semiconductor facilities, advanced manufacturing investments, or supply chain expansion projects.
35%enhanced Section 48D credit (OBBB, 2026)
Dec 2026construction-start deadline
$36B+in grants allocated to date
2026 At-A-Glance
Manufacturing Grants Pool
$39 B
Tax Credit (Section 48D)
35%
Construction Deadline
Dec 31, 2026
Recapture Period
10 years
CHIPS Act 2026 At a Glance — The Headline Numbers
The CHIPS and Science Act of 2022 appropriated $52.7 billion over five years to boost U.S. semiconductor manufacturing and research. The Department of Commerce administers $39 billion in manufacturing incentive grants (through the CHIPS Program Office) and $11 billion for R&D (through the CHIPS R&D Office). Separately, the Section 48D Advanced Manufacturing Investment Credit provides a refundable tax credit on qualified investments in semiconductor facilities and equipment. The 2026 landscape differs from earlier years in three ways: the tax credit rate increased to 35%, $36B+ has been allocated to specific recipients, and the construction-start deadline is approaching fast.
$52.7B
Total CHIPS Act funding over 5 years
Split: $39B manufacturing incentives + $11B R&D + $2B DoD Microelectronics Commons + other programs
35%
Enhanced Section 48D credit rate (2026)
Increased from 25% under OBBB for property placed in service after 2025. Refundable with direct pay election available.
$36B+
Allocated to specific recipients as of Nov 2025
Intel ($7.86B), TSMC ($6.6B), Samsung ($4.7B), Micron ($6.16B), GlobalFoundries ($1.5B+), Texas Instruments ($1.61B), plus 40+ others
Dec 31, 2026
Hard construction-start deadline
Section 48D credit does not apply to property the construction of which begins after this date. No extensions currently authorized.
10 years
Recapture period for applicable transactions
Credit subject to recapture if taxpayer engages in certain transactions within 10 years of placing qualified investment in service
$500B+
Private investment catalyzed
100+ projects announced across the U.S. since CHIPS Act enactment in August 2022, representing over $500 billion in private investment commitments
The Section 48D 35% Enhanced Tax Credit — What Changed in 2026
The Section 48D Advanced Manufacturing Investment Credit was the cornerstone tax incentive of the original CHIPS Act, providing a 25% credit on qualified investments in semiconductor manufacturing facilities and equipment. The One Big Beautiful Bill (OBBB) enhanced this credit to 35% for property placed in service after 2025 — a 40% increase in incentive value for new advanced manufacturing capacity. The other rules remain largely unchanged: the credit is refundable, eligible for direct pay election, applies to construction begun after August 9, 2022, and is subject to a 10-year recapture period for applicable transactions.
Credit Rate
Original (2022 CHIPS Act)
25%
→
Enhanced (OBBB, 2026)
35%
A 40% relative increase in tax credit value. For a $5B advanced manufacturing investment, the enhanced credit represents $1.75B in federal tax benefit versus $1.25B under the original rate — a $500M difference per $5B invested.
Refundability
Direct Pay Election Available
Section 48D is structured as a refundable credit. Taxpayers can elect to treat the credit as a direct payment, receiving the value as cash even without sufficient tax liability to absorb it. The election must be made by the federal income tax return filing date (plus extensions) and is irrevocable. Taxpayers must register through an IRS electronic portal before treating Section 48D as a direct payment.
Eligible Property
Semiconductors & Manufacturing Equipment
The credit applies to qualified property that is part of an advanced manufacturing facility whose primary purpose is manufacturing semiconductors or semiconductor manufacturing equipment. Property must be integral to the operation of the facility. The Treasury Department issued final regulations on October 23, 2024 (T.D. 10009) defining the contours of eligibility, including construction-begun rules, applicable taxpayer definitions, and recapture transaction categories.
Recapture Risk
10-Year Applicable Transaction Window
The Section 48D credit is subject to recapture if a taxpayer engages in an “applicable transaction” within 10 years of placing the qualified investment in service. The recapture rules include foreign expansion restrictions designed to prevent CHIPS-funded capacity from being relocated to foreign entities of concern. Recapture provisions are codified in IRC Section 50(a) as amended.
Modeling Section 48D into your facility investment? Schedule a greenfield consulting session — we walk through the credit calculation, refundability mechanics, and recapture risk against your specific project structure.
Who Qualifies — CHIPS Act Eligibility Requirements
CHIPS Act eligibility splits across two tracks: the Section 48D tax credit (administered by Treasury/IRS) and the manufacturing incentive grants (administered by the Department of Commerce CHIPS Program Office). Each track has distinct eligibility tests. The tax credit applies broadly to taxpayers with qualified investments in advanced manufacturing facilities. The grant program is more competitive and prioritizes projects that demonstrably strengthen U.S. supply chains, support workforce development, and align with national security objectives. Foreign entities of concern (per defined statutory criteria) are prohibited from receiving either form of incentive.
Track 01
Section 48D Tax Credit
Eligible taxpayer: U.S. corporation, partnership, S-corp, or other entity making qualified investment
Advanced manufacturing facility: Primary purpose of manufacturing semiconductors or semiconductor manufacturing equipment
Qualified property: Property integral to the operation of the facility, placed in service after Dec 31, 2022
Construction window: Begun after August 9, 2022 (CHIPS Act enactment); cannot begin after December 31, 2026
Foreign entity restriction: Taxpayer must not be a foreign entity of concern as defined in statute
No prior recapture event: Taxpayer has not engaged in disqualifying applicable transaction
Track 02
CHIPS Manufacturing Grants
Project location: U.S. facility — CHIPS Act does not support facilities constructed or operated abroad
Meaningful steps taken: Applicant must have taken meaningful steps toward developing or expanding U.S. manufacturing facilities
Supply chain resilience: Project demonstrably strengthens U.S. semiconductor supply chains (highest weight in scoring)
Workforce strategy: Long-term commitments to workforce recruitment, training, and community investment
National security alignment: Production supports government needs for safe, secure, domestically produced chips
Eligible recipient types: Semiconductor fabs, equipment manufacturers, materials suppliers, advanced packaging facilities, including consortiums
The CHIPS Manufacturing Grant Program — $39B Pool, $36B+ Allocated
Separate from the Section 48D tax credit, the $39 billion CHIPS Manufacturing Incentive grant program is administered by the Department of Commerce CHIPS Program Office. As of November 2025, the Commerce Department had allocated over $36 billion across 48 finalized awards spanning semiconductor manufacturing facilities, supply chain materials, equipment manufacturers, and advanced packaging capabilities. The largest awards went to the five anchor companies that received the bulk of public attention — but dozens of smaller awards went to suppliers, materials manufacturers, and specialty fabs that form the broader semiconductor ecosystem.
Tier 01 · Anchor Recipients ($1B+ each)
The Five Major Awards
Intel
$7.86 B
Arizona, New Mexico, Ohio, Oregon · Intel 18A (1.8nm) HVM at Fab 52 reached early 2026
TSMC
$6.6 B
Three Phoenix fabs (4nm, 3nm, 2nm) · +$5B in loans · $65B total private investment
Micron
$6.17 B
Clay, New York and Boise, Idaho · +$7.5B in loans · DRAM production
Samsung
$4.7 B
Taylor, Texas · 2nm logic fabs + R&D fab + Austin expansion
Texas Instruments
$1.61 B
Three new facilities in Texas and Utah
GlobalFoundries
$1.5 B+
New York and Vermont · +$75M supplemental for mature node and packaging
Tier 02 · Supply Chain & Specialty
40+ Smaller Awards
The remaining ~$8B of allocated CHIPS Manufacturing Incentive grants spans 40+ smaller awards to semiconductor materials suppliers, equipment manufacturers, advanced packaging facilities, specialty fabs, and consortium projects. Recipients include companies producing wafer-handling containers, lithography materials, photoresist chemistry, advanced substrates, and specialty silicon wafers. The CHIPS Program Office explicitly prioritizes building “dozens of suppliers” around each anchor cluster to close gaps in the U.S. supplier ecosystem.
Plan Your CHIPS Act Facility Before the December 2026 Deadline
Construction must begin by December 31, 2026 for Section 48D eligibility. A greenfield consulting session walks through site selection, supply chain qualification, construction execution timeline, and CHIPS Act application positioning — tailored to your specific facility plans and capital budget.
The December 31, 2026 Construction Deadline — Why It Matters
The Section 48D Advanced Manufacturing Investment Credit terminates for property the construction of which begins after December 31, 2026. This is a hard statutory deadline written into IRC Section 48D(e), and no extensions are currently authorized. Manufacturers planning semiconductor facilities or equipment investments who fail to break ground by year-end 2026 lose access to the 35% federal tax credit entirely. Treasury final regulations (T.D. 10009) define “begun construction” using established physical work-of-significant-nature standards combined with the 5% safe harbor — meaning the deadline pressure is real for any project not already in execution.
What “Begun Construction” Means
Physical work test: Physical work of a significant nature has commenced on the qualified property or facility
5% safe harbor: Taxpayer has paid or incurred at least 5% of the total cost of the qualified property
Continuous progress required: Taxpayer must maintain continuous program of construction or continuous efforts after begun-construction date
Documentation critical: Begun-construction status must be documented for IRS audit purposes
Critical Path for 2026 Projects
Q1–Q2 2026: Site selection finalized, permitting complete, construction contracts signed
Q3 2026: Physical work commences, 5% safe harbor threshold targeted
Q4 2026: Continuous construction program documented, begun-construction status established
2027+: Construction continues with Section 48D credit secured for full investment
How to Apply for CHIPS Act Funding — The Two-Track Path
Manufacturers pursuing CHIPS Act funding navigate two separate processes. The Section 48D tax credit requires no application in the grant sense — eligible taxpayers claim the credit on their federal tax return after registering through the IRS electronic portal for direct-pay election. The CHIPS Manufacturing Grant program requires a competitive application through the CHIPS Program Office at the Department of Commerce, including concept plan submission and full application development with detailed project, workforce, and supply chain documentation.
01
Section 48D Tax Credit Process
Confirm eligibility against statutory definitions (advanced manufacturing facility, qualified property)
Document begun-construction status before December 31, 2026 deadline
Register through IRS electronic portal for direct-pay election (if elected)
Claim credit on federal income tax return for year property placed in service
Maintain compliance with 10-year recapture period for applicable transaction restrictions
02
CHIPS Manufacturing Grant Process
Submit concept plan to CHIPS Program Office under active Notice of Funding Opportunity (NOFO)
If invited, develop full application with project, financial, workforce, supply chain documentation
Demonstrate “meaningful steps” toward U.S. facility development as part of application
Address scoring priorities: supply chain resilience (highest weight), workforce strategy, national security alignment
Comply with Davis-Bacon Act and other federal labor/procurement requirements during construction
Negotiate award terms with Commerce Department including milestone, reporting, and clawback provisions
Need help mapping your project against both tracks? Schedule a greenfield consulting session — we walk through eligibility, application timing, and execution sequencing for your specific facility plans.
Why Greenfield Execution Matters for CHIPS Act ROI
The CHIPS Act federal incentive (35% tax credit + potential grant) only delivers value if the underlying facility actually gets built, on schedule, and operates at planned capacity. Industry data shows greenfield semiconductor and advanced manufacturing projects exceed budget and schedule 70–85% of the time. A 12–24 month delay on a $5B fab represents not just delayed CHIPS Act benefit realization but also delayed revenue, market positioning, and customer commitments. Greenfield execution discipline — site selection, permitting, supply chain qualification, construction sequencing, equipment commissioning — determines whether the CHIPS Act incentive actually gets captured or gets eroded by overruns.
01
Site Selection & Permitting
CHIPS Act facilities require state and local incentive layering on top of federal incentives. Site selection optimizes the combined incentive stack. Permitting (environmental, zoning, utility, water) drives construction-start timing — critical for Dec 2026 deadline.
02
Supply Chain Qualification
Semiconductor fabs require qualified suppliers for hundreds of specialty materials, equipment, and services. CHIPS Act grant scoring rewards demonstrated U.S. supplier ecosystem development. Pre-construction supplier qualification accelerates ramp-up and protects schedule.
03
Construction Sequencing
Begun-construction documentation requires careful sequencing to hit physical work or 5% safe harbor thresholds by Dec 2026. Continuous progress documentation prevents IRS audit risk on the begun-construction qualification.
04
Equipment Commissioning
Section 48D applies when qualified property is placed in service. Equipment commissioning delays push tax credit benefit realization. Pre-commissioning AI-driven validation reduces ramp-up time and protects credit timing.
05
Workforce Development
CHIPS Act grant applications require documented workforce strategies covering recruitment, training, and community investment. Workforce planning during construction shortens production ramp-up and supports grant compliance reporting.
06
Compliance & Recapture Protection
10-year recapture period requires sustained compliance with applicable transaction restrictions. Documentation systems, governance frameworks, and transaction screening processes protect against credit clawback risk during the post-placement window.
Expert Perspective
"The CHIPS Act landscape in 2026 has two stories running in parallel. The headline story is the 35% enhanced tax credit under OBBB — a meaningful increase in federal incentive value for new advanced manufacturing capacity, and the strongest single-year enhancement to U.S. semiconductor incentives since the original 2022 Act. The under-the-radar story is the December 31, 2026 construction deadline, which is now close enough that manufacturers without active projects underway face real risk of missing the credit entirely. Both stories converge on the same operational reality: greenfield execution discipline matters more than ever. The 35% credit on a $5B fab represents $1.75B in federal value — but only if the project breaks ground by year-end 2026, builds on schedule, places qualified property in service, and maintains 10-year compliance through the recapture window. Manufacturers who treat the CHIPS Act as a financing strategy without paired execution discipline see the headline incentive value erode through schedule overruns, scope changes, and applicable-transaction missteps that trigger partial recapture. The U.S. semiconductor manufacturing buildout is producing real results — Intel 18A in high-volume production at Arizona Fab 52, TSMC Arizona Fab 1 in production since 2025, and a broader supplier ecosystem coming online — but the financial value capture depends on disciplined execution alongside the incentive capture."
— U.S. Advanced Manufacturing Practice, 2026 industry perspective
35%
enhanced Section 48D tax credit rate
$1.75B
federal credit value on a $5B fab investment
10 years
compliance window for recapture protection
Map Your CHIPS Act Project Before Year-End 2026
A greenfield consulting session covers your specific facility plans: Section 48D eligibility verification, grant program positioning, construction-start sequencing for the December 2026 deadline, supply chain qualification roadmap, and 10-year recapture compliance framework. No engagement commitment required to participate.
Frequently Asked Questions
Is the Section 48D credit really 35% in 2026?
Yes. The original CHIPS Act of 2022 established Section 48D at 25% of qualified investment. The One Big Beautiful Bill (OBBB) enhanced the credit to 35% for property placed in service after 2025. The 35% rate applies to property placed in service in 2026 and beyond, provided construction began after August 9, 2022 and before December 31, 2026. The other Section 48D mechanics remain unchanged — the credit is refundable with direct pay election available, subject to 10-year recapture for applicable transactions, and applies only to advanced manufacturing facilities whose primary purpose is manufacturing semiconductors or semiconductor manufacturing equipment.
What happens if my project doesn’t start construction before December 31, 2026?
Section 48D credit eligibility terminates. IRC Section 48D(e) states the credit does not apply to property the construction of which begins after December 31, 2026. No extensions are currently authorized. Projects that fail to meet begun-construction status by year-end 2026 forfeit the 35% federal tax credit entirely, though they remain eligible for other federal manufacturing incentives, state and local tax abatements, and the CHIPS Manufacturing Grant program (which has its own application timing). The Treasury final regulations define begun-construction using physical work of significant nature or the 5% safe harbor (5% of total cost paid or incurred), with continuous progress required after the begun-construction date.
Does the CHIPS Act fund non-semiconductor manufacturing?
No, not directly through Section 48D or the CHIPS Manufacturing Incentive grants. Both programs specifically target semiconductors and semiconductor manufacturing equipment. However, several adjacent federal programs support broader advanced manufacturing: the DoD’s Microelectronics Commons ($2B), various Department of Energy manufacturing incentives, IRA-related advanced manufacturing credits (Section 45X for clean energy components), and state-level incentives that often layer with CHIPS Act benefits. Manufacturers in adjacent advanced manufacturing categories (batteries, EVs, clean energy components) should evaluate IRA Section 45X and 48 credits rather than CHIPS Act Section 48D.
Can foreign-owned companies receive CHIPS Act incentives?
Yes, with restrictions. TSMC (Taiwan), Samsung (South Korea), and other foreign-headquartered companies have received major CHIPS Act grants for U.S. facilities. The CHIPS Act explicitly supports international companies investing in U.S. manufacturing capacity. However, “foreign entities of concern” as defined by statute are prohibited from receiving either the Section 48D credit or grant funding — this category includes entities owned or controlled by certain foreign governments. The Section 48D recapture provisions also include foreign expansion restrictions designed to prevent CHIPS-funded capacity from being relocated to foreign entities of concern within the 10-year recapture window. Funding requires that facilities be located in the United States — CHIPS Act does not support facilities constructed or operated abroad.
Can I get both the Section 48D credit AND a CHIPS Manufacturing Grant?
Yes — the two programs are independent and can be stacked. Major CHIPS Act recipients including Intel, TSMC, Samsung, and Micron are claiming both the Section 48D tax credit (typically up to 25% or 35% on qualified investment) and CHIPS Manufacturing Grant funding (in their case, billions in direct federal grants). The combination is intentional under the legislative design — the grant covers a portion of capital investment, and the tax credit covers a portion of remaining qualified investment basis. Manufacturers should model both incentive sources together when planning facility economics. The grant amount typically does not reduce the qualified investment basis for Section 48D purposes, but the specific treatment depends on grant terms.
What does the 10-year recapture period actually mean?
The Section 48D credit is subject to recapture if the taxpayer engages in an “applicable transaction” within 10 years of placing the qualified investment in service. Applicable transactions include certain expansions of semiconductor manufacturing capacity in foreign countries of concern or transactions involving certain joint research or technology licensing with foreign entities of concern. The recapture rules are codified in IRC Section 50(a) as amended. Recapture is calculated based on a schedule that reduces over time — meaning a transaction triggering recapture in year 2 of the 10-year window recaptures more credit than one triggering in year 8. Manufacturers should establish transaction screening processes and governance frameworks to manage applicable-transaction risk throughout the 10-year window. The recapture provisions are designed primarily to prevent CHIPS-funded capacity from being relocated to or duplicated in foreign entities of concern; they do not generally affect ordinary-course business operations or U.S. expansion.
