A bill that could help existing, start-up semiconductor makers in the Lehigh Valley- and encourage others to come here- is making its way through the Pennsylvania legislature.

House Bill 500 is part of Governor Shapiro’s wide-reaching energy plan, the so-called Lightning Plan. It reshapes the existing Pennsylvania Economic Development for a Growing Economy (EDGE) Tax Credit Program. 

The bill’s author, Pa. Rep. John Inglis of Allegheny County, likened it to EDGE 2.0. It passed the state House on May 14 and is pending action in the state Senate.

One component of the bill is of particular interest to the Lehigh Valley Economic Development Corporation (LVEDC); that is, the part that lowers the threshold for which semiconductor and biomedical manufacturers can secure tax credits.

Previously, under legislation authorized in 2022, companies were required to invest at least $200 million and create 800 jobs to qualify. House Bill 500 puts those tax credits on the table for projects that invest at least $100 million and create at least 100 jobs.

LVEDC President and CEO Don Cunnigham testified in support of the new bill. “LVEDC has been lobbying for several years now to adjust that tax credit to allow for smaller projects,” he told 69 News. “Because what’s happening in the semiconductor industry, while the mega-fabs have gotten all the headlines, there’s been a lot of development spurred by the CHIPS Act.”

The CHIPS Act, formally known as the Creating Helpful Incentives to Produce Semiconductors Act, was signed into law by then-President Joe Biden in 2022, with a goal of increasing domestic semiconductor manufacturing and research. 

Pennsylvania was one of many states that aimed to sweeten the pot by adding incentives to attract semiconductor manufacturers. But those credits, Cunningham said, could only be attained by “mega-sites”: “Those large fab decisions have been made. They’ve gone to Arizona and Ohio and New York.”

That left smaller start-ups out in the cold. Cunningham estimates the Lehigh Valley has anywhere from 30 to 35 semiconductor or opto-electronic companies. Two- Coherent and Infinera- were in the headlines in recent months, after being awarded tens of million dollars in CHIPS funding.

But others- like Aayuna in Allentown, and iDEAL Semiconductor in Bethlehem- are also doing important work. “We have a bunch of smaller, early-stage companies here that we’d like to help grow,” Cunningham said. “They can take advantage of the tax credit to grow in Pennsylvania. A lot of states have gotten very aggressive about trying to attract semiconductor companies. We don’t want to lose what we have.”

Cunningham used a baseball analogy to explain it a different way: “It’s kind of like a major league team that has a really good minor league farm system. We want to develop that farm system and have them grow into all-star players. So we have that, and we believe that this type of incentive will retain them here.”

iDEAL was one of the businesses born inside the incubator Ben Franklin TechVentures in Bethlehem. Cunningham said, a priority moving forward is expanding Ben Franklin to include a technology hub to grow early-stage companies in the Lehigh Valley. “We have a grant from the state of $2.5 million that is already in the budget to help with that,” he said. 

One site under consideration- 119 Technology Drive in Bethlehem- has since been scooped up the German pharmaceutical company GfM. The process of identifying a new location is underway, Cunningham said.