The Pennsylvania House Finance Committee has endorsed legislation to make it easier for semiconductor companies to qualify for $10 million in state tax credits. 
The near-unanimous vote Oct. 1 advances the legislation to the floor of the House for a vote. If approved, the bill would move to the Senate for consideration.
The Lehigh Valley has a rich legacy of technological innovation, and semiconductor and other technology companies are being targeted for growth by Lehigh Valley Economic Development Corp. (LVEDC) and its partners.
The bill, House Bill 2565, was written by Lehigh Valley Rep. Steve Samuelson, based on feedback from his constituents. Samuelson hopes his legislation could jumpstart ongoing efforts to create an incubator for early-stage semiconductor companies in the Lehigh Valley.
“We have early-stage semiconductor companies all across Pennsylvania, and I want to propose this to allow that tax credit to be used and to encourage job creation all across Pennsylvania,” Samuelson said during the Oct. 1 committee meeting.
His legislation would modify the eligibility criteria for the $10 million in tax credits authorized by the Pennsylvania Legislature for the semiconductor industry in 2022.
At the time, the incentives were offered to attract large manufacturing operations to Pennsylvania. The legislation requires companies to create 800 jobs or invest $200 million to qualify.
The funding has not been tapped, and Samuelson said it’s time for Pennsylvania to rethink those requirements.
His legislation proposes reducing the minimum investment to $20 million and the minimum job creation, or retention, to 100. Projects would qualify for tax credits at a rate of 2.5% of investment, meaning a $40 million investment would qualify for $1 million in tax credits. The bill also would set aside $2 million for early-stage businesses.
The legislation has the support of LVEDC and Lehigh University. At a House Finance Committee meeting in September, LVEDC President and CEO Don Cunningham and Lehigh Provost and Senior Vice President for Academic Affairs Nathan Urban testified that the bill could help efforts to grow the semiconductor sector.
The world’s first mass production of transistors, the forerunners of semiconductors, occurred in Allentown at Western Electric in 1951. Today, the Lehigh Valley’s technology industry features about 30 companies including Intel, Broadcom, Coherent, Infinera, and iDEAL Semiconductor. Collectively, they employ about 1,500 people and produce technology relied upon by brands such as Google, Microsoft, Meta, AWS, AT&T, Verizon, Netflix, and Nokia.
Last year, LVEDC led a coalition of partners to seek a federal tech hub designation. While the application was unsuccessful, the process helped foster future collaborations with tech companies, colleges, universities, community organizations, workforce development partners, and government partners to build on the Lehigh Valley’s strong heritage in communications technology, materials science, and advanced manufacturing.
One of the outcomes of the collaboration was LVEDC’s 2023 Fall Signature Event, which explored the Lehigh Valley’s historic roots in the sector, the technological leaders here today, and the advancements planned for the future. The event recently won the Gold Award from the International Economic Development Council, the largest professional organization for economic developers.
(Photo of iDEAL Semiconductor wafers by Donna Fisher Photography. Photo of Rep. Steve Samuelson courtesy of Pennsylvania House of Representatives)