Protecting Circuit Boards and Substrates Act
- Sponsor
- Rep. Moore, Blake D. [R-UT-1]
- Committees
- Science, Space, and Technology Committee (primary)
- Last action
- May 23, 2025
Bottom line
The bill aims to bolster the domestic supply chain for critical electronic components through a combination of tax incentives and direct financial aid, enhancing national security and economic competitiveness.
What it actually does
This bill establishes a 25% tax credit for businesses that purchase or acquire domestically fabricated printed circuit boards (PCBs) and integrated circuit substrates (ICSs). It also creates a $3 billion financial assistance program, administered by the Secretary of Commerce, to incentivize domestic manufacturing and research and development for these critical electronic components. The program includes detailed eligibility criteria, preferences for certain business types and workforce partnerships, and robust clawback provisions to ensure accountability and prevent engagement with foreign entities of concern.
Proponents argue
Proponents argue that this legislation is crucial for strengthening the United States' national security and economic resilience by reducing reliance on foreign supply chains, particularly for essential components like PCBs and ICSs. They contend that these domestic production incentives will create high-tech jobs, foster innovation, and secure a critical industrial base, preventing future vulnerabilities seen during global supply chain disruptions.
Opponents contend
Opponents might argue that such targeted tax credits and financial assistance programs distort free markets, potentially leading to inefficient allocation of resources or favoring specific companies over others. They could also raise concerns about the overall cost to taxpayers, the potential for fraud or misuse of funds, and whether the proposed incentives are sufficient to overcome existing economic disadvantages of domestic manufacturing compared to global competitors.
The bill is moderately detailed but accessible, allowing a diligent reader to understand its core mechanisms and implications within a reasonable timeframe.
Section 2, amending Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986.
New Section 45AA: Credit for the Purchase or Acquisition of Printed Circuit Boards Fabricated in the United States
This provision creates a new federal tax credit equal to 25% of the cost paid by a taxpayer for purchasing or acquiring printed circuit boards and integrated circuit substrates that are fabricated in the United States. This credit is added to the general business credit and applies to amounts paid or incurred after December 31, 2025.
Supporters argue
Supporters argue this tax credit directly incentivizes companies to source critical electronic components domestically, thereby strengthening the U.S. manufacturing base and reducing reliance on foreign supply chains. It makes domestic products more competitive on price.
Critics contend
Critics might argue that tax credits can be an inefficient way to stimulate manufacturing, potentially benefiting companies that would have purchased domestically anyway, or that the 25% might not be enough to offset higher domestic production costs, leading to limited impact.
Tradeoffs
Balances the goal of domestic supply chain resilience against potential costs to federal revenue and the risk of market distortion.
Section 3(b)
Establishment of a Financial Assistance Program for PCB/ICS Manufacturing and R&D
The Secretary of Commerce is directed to establish a program providing federal financial assistance to covered entities (private entities or consortia) to incentivize investment in U.S. facilities and equipment for manufacturing or research and development of printed circuit boards and integrated circuit substrates. This program aims to boost domestic production capacity and innovation in these critical sectors.
Section 3(b)(2)
Application Procedure, Eligibility, and Preferences for Financial Assistance
This provision outlines the requirements for covered entities to receive financial assistance, including demonstrating interest in a covered incentive, having an executable plan for sustainability, and making commitments to worker and community investment (training, expanding employment for economically disadvantaged individuals). It also specifies preferences for small, minority-owned, women-owned, veteran-owned businesses, those expanding U.S. production, relocating from foreign entities of concern, and those partnering with diverse educational institutions for workforce training. Small businesses are exempt from some worker/community investment requirements.
Section 3(b)(2)(G) and Section 3(b)(5)
Exclusion of Foreign Entities of Concern and Financial Clawback Mechanisms
The bill explicitly prohibits financial assistance to "foreign entities of concern" and includes robust clawback provisions. The Secretary can recover funds if projects are not commenced or completed by target dates (with progressive recovery for delays, waivable under strict conditions) or if recipients knowingly engage in joint research or technology licensing with foreign entities of concern related to national security technologies.
Section 3(e)
Funding Authorization for the Financial Assistance Program
This section authorizes the appropriation of $3,000,000,000 for fiscal year 2026 to carry out the financial assistance program established under Section 3. These funds are to remain available through fiscal year 2065, indicating a long-term commitment to the program.
Defines "fabricated" for the purpose of the tax credit as "the use of raw materials to manufacture a connected composite structure featuring electrically conductive and non-conductive elements by subtractive, additive, or other technique."
Section 2(b)(2)
Why it matters:Standard legislative practice to define terms for clarity and scope.
Case for: Ensures that only genuinely domestic manufacturing processes, starting from raw materials, qualify for the tax credit, preventing mere assembly operations from benefiting.
Case against: Could be seen as overly restrictive if certain stages of the manufacturing process are necessarily outsourced or if the definition excludes innovative fabrication methods not explicitly covered.
Estimated impact: Determines the precise scope of eligibility for the 25% tax credit, influencing which domestic activities are incentivized.
Mandates that the Secretary of Commerce coordinate with eight other federal agencies and departments (State, Defense, Energy, DNI, Minority Business Development Agency, SBA, NIST, CISA, OFAC) when carrying out the financial assistance program.
Section 3(c)
Why it matters:Standard practice for interagency collaboration on complex programs.
Case for: Ensures a whole-of-government approach, leveraging expertise from national security, economic development, and cybersecurity agencies, and promoting efficient use of resources.
Case against: Could introduce bureaucratic delays or coordination challenges if not managed effectively, potentially slowing down program implementation.
Estimated impact: Shapes the administrative structure and strategic direction of the $3 billion financial assistance program.
Allows the Secretary to waive elements of the clawback provisions for project delays only if a formal determination is made that "circumstances beyond the ability of the covered entity to foresee or control are responsible for delays" and Congress is notified.
Section 3(b)(5)(A)(iii)
Why it matters:Provides necessary flexibility for unforeseen circumstances while maintaining accountability, a common legislative compromise.
Case for: Prevents undue punishment for recipients facing legitimate, uncontrollable delays (e.g., natural disasters, global crises), ensuring the program remains practical.
Case against: Could be a loophole if not strictly enforced, potentially allowing recipients to avoid accountability for delays that were, in fact, preventable or foreseeable with better planning.
Estimated impact: Affects the financial risk profile for recipients and the Secretary's discretion in managing the program.