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The Lehigh Valley Economic Development Corporation is speaking out in favor of a state bill that would benefit the semiconductor industry, which has a strong presence in the region. 

House Bill 500 would allow previously approved tax credits to be tapped for projects that invest at least $100 million and create at least 100 jobs. Those thresholds are lower than what’s currently required. 

Projects would qualify for tax credits at a rate of 2.5% of investment. 

The legislation passed the state House on May 14 and is now pending in the state Senate. 

Saying it would expand semiconductor and technology manufacturing, along with biomedical manufacturing and research, Don Cunningham, President & CEO of the LVEDC said the legislation would make state tax credits easier to attain.  

He testified in support of the legislation at a House Finance Committee hearing on May 1. 

He said the changes have been a legislative priority of LVEDC for the last three years, with LVEDC working closely with Lehigh Valley Rep. Steve Samuelson, who is chair of the House Finance Committee. 

“Our coalition, as probably the leading area of Pennsylvania with an existing cluster of semiconductor companies, we strongly support the language change to make the semiconductor tax credit portion of the act more flexible and scaled down to incentivize smaller projects,” Cunningham testified. 

Recent awards to two Lehigh Valley tech companies under the federal CHIPS and Science Act have accelerated investment locally, he said. 

“We’re trying to attract development to make Pennsylvania a leader in economic development,” Samuelson said at the committee hearing. 

The Lehigh Valley has around 30 companies including Intel, Broadcom, Infinera and Coherent producing technology relied on by Meta, AWS, Netflix, and the U.S. Department of Defense that continue the region’s legacy as a tech center. 

“Lehigh Valley was actually the Silicon Valley before there was a Silicon Valley, and it remains a growing part of our economy, including early-stage companies like Aayuna and iDeal Semiconductor,” Cunningham said. 

The tax credits for semiconductor and biomed manufacturers were approved under legislation in 2022 that authorized $10 million a year for five years, with the goal of attracting large manufacturing operations.  

The legislation requires investment of $200 million and the creation of 800 jobs to qualify. 

The funding has not been tapped and Samuelson said lawmakers are rethinking those requirements. He said the criteria should be loosened, to make more companies and projects eligible, including early-stage companies. 

The bill would set aside $2 million for early-stage businesses, those that have less than $10 million in revenue and have invested at least $3 million in research and development over the past three years. 

The early-stage semiconductor tax credit is an idea proposed by LVEDC.   

House Bill 500 was introduced by Rep. John Inglis III.  

Cunningham said it is a broad bill, with the semiconductor and biomedical manufacturing tax credits only one part.  

The legislation is a central piece of Gov. Josh Shapiro‘s “Lightning Plan” to create energy jobs, attract investment in power plants and energy infrastructure, and reduce electricity bills.