CHIPS Act Explained: Grants, the 48D Tax Credit and the 2026 Deadline

The CHIPS Act, formally the CHIPS and Science Act of 2022, is a US law that provides $50 billion to rebuild domestic semiconductor manufacturing and research, plus a tax credit for chip plants, the Section 48D advanced manufacturing investment credit. As of October 2026, the 48D credit is 35% of qualified investment for property placed in service after 2025, but it only reaches property whose construction begins by December 31, 2026.

That second date is the one that matters most for chipmakers deciding where and when to break ground. This page explains how the grants work, what the tax credit covers, and what has changed since 2025. It is a news explainer, not tax advice.

What the CHIPS Act funds

According to the CHIPS for America pages at NIST, the law provides $50 billion across semiconductor R&D, manufacturing and workforce programmes. The money is split between two offices:

• $39 billion for manufacturing incentives, run by the CHIPS Program Office. It covers commercial fabrication facilities and facilities that make semiconductor materials and manufacturing equipment.
• $11 billion for research and development, run by the CHIPS Research and Development Office. Programmes include the National Advanced Packaging Manufacturing Program and a metrology programme.

Alongside the direct funding, the law added the tax credit described below. Together, the grants and the credit were designed to lower the cost gap between building a fab in the United States and building one in Asia.

How the grant awards work

Companies apply to the Commerce Department, which negotiates an award agreement. Money is typically paid out in stages as a company reaches construction and production milestones, rather than up front. Awards are announced first as preliminary terms and later finalised, and the final figures can differ from the first announcement.

Some well-known examples from Commerce announcements:

• TSMC: $6.6 billion for fabs in Arizona, finalised in November 2024.
• GlobalFoundries: up to $1.5 billion for its New York and Vermont sites, finalised in late 2024. On October 14, 2026, NIST listed an amended award that reallocates up to $955 million toward silicon photonics, silicon-germanium and advanced packaging.
• Samsung and Micron: preliminary terms of roughly $6.4 billion (Samsung, Texas) and $6.1 billion (Micron, New York and Idaho) were announced in April 2024. Final amounts were negotiated afterwards, so check the Commerce award notice before quoting them.

Because amounts get renegotiated, treat any list of awards as a snapshot and confirm against the official award page before quoting a figure.

What changed in 2025 and 2026

The biggest shift came in August 2025, when the US government converted part of Intel's funding into shares. In Intel's announcement, the company said the government would invest $8.9 billion in common stock, about a 9.9% passive stake with no board seat. The money came from $5.7 billion of CHIPS grants that had been awarded but not yet paid and $3.2 billion from the Secure Enclave programme. Intel had already received $2.2 billion in CHIPS grants, for a total of $11.1 billion.

The same agreement removed claw-back and profit-sharing terms tied to that earlier $2.2 billion grant and gave the government a five-year warrant for a further 5% of shares, exercisable only if Intel stops owning at least 51% of its foundry business.

Since then, NIST has continued to announce awards and amendments. Its CHIPS page lists, among others, a final award of up to $100 million to Quantinuum (September 8, 2026), a final R&D award of up to $1 billion to Anderon, an IBM subsidiary (September 16, 2026), and letters of intent for up to $389 million in R&D awards in the energy semiconductor supply chain (October 22, 2026).

The Section 48D tax credit

Section 48D is the advanced manufacturing investment credit, an income tax credit for companies that build semiconductor manufacturing facilities or semiconductor manufacturing equipment facilities in the US. The IRS page on the credit sets out the basics.

What is the credit rate?

• 25% of qualified investment for property placed in service from December 31, 2022 through December 31, 2025.
• 35% for property placed in service after that, following the 2025 tax law (Public Law 119-21), which raised the rate.

What counts as qualified property?

According to the IRS, qualified property must be placed in service after December 31, 2022, be tangible property subject to depreciation or amortisation, and be integral to the operation of an advanced manufacturing facility. The taxpayer must have built or acquired it, and its original use must begin with the taxpayer. Offices, administrative space and other areas unrelated to manufacturing do not qualify.

What is the 2026 deadline?

The statute, 26 U.S.C. 48D, says the credit does not apply to property whose construction begins after December 31, 2026. Two dates are easy to confuse here:

1. Construction start must happen by the end of 2026 for the property to be eligible at all.
2. Placed in service determines which rate applies, and the credit is claimed when the property enters service, which for a large fab can be years after construction starts.

This is why a number of fab announcements cluster before the end of 2026: a groundbreaking before the cutoff can lock in eligibility for a project that will not produce chips until later in the decade. Whether Congress extends the window is a separate question, and as of October 2026 the law as published says December 31, 2026.

Grants versus the tax credit

The two tools work differently. Grants are negotiated one by one with Commerce and tied to milestones. The 48D credit is a rule in the tax code that any qualifying taxpayer can claim, without a competitive application. A company can receive both, though grant amounts can affect how the investment is calculated, so the interaction is a question for a tax adviser.

Why it matters for the chip industry

US fab capacity is still small next to Taiwan, South Korea and China, and leading-edge production, the kind covered in our explainer on TSMC process nodes, is concentrated in a few firms. The grants and the credit are the main federal levers aimed at changing that. Follow the ongoing coverage in our Chips section and in Tech Policy, and see Regulation for related rules such as export controls.

Frequently asked questions

What is the CHIPS Act in simple terms?

It is a 2022 US law that gives $50 billion to domestic chip manufacturing, research and workforce programmes, and adds a tax credit for building fabs and equipment plants in the US.

What is the 48D tax credit rate?

It is 25% of qualified investment for property placed in service through December 31, 2025, and 35% for property placed in service after that, according to the IRS.

When does the 48D credit expire?

The credit does not apply to property whose construction begins after December 31, 2026. Property that began construction on time can still qualify when it is later placed in service.

How much of the CHIPS Act is for manufacturing?

$39 billion is set aside for manufacturing incentives, with $11 billion for research and development, according to NIST.

Does the US government own part of Intel?

Yes. Under an August 2025 agreement, the government bought about a 9.9% passive stake in Intel using $8.9 billion that was largely drawn from CHIPS grants and the Secure Enclave programme.