The US is set to start cutting checks directly to chip makers in 2023 to help new American manufacturing plants get off the ground. This week the Biden administration offered new details on the second leg of its strategy: tax credits that could be rolling out for years to come.

The Treasury Department and the Internal Revenue Service released new guidance on how companies can qualify for an "advanced manufacturing investment credit," a key piece of President Biden’s CHIPS and Science Act that was designed to bring semiconductor manufacturing back to the United States.

The US has fallen behind places like Taiwan in recent decades, especially in the making of the most advanced chips. A recent report from the Semiconductor Industry Association found that 0% of the world’s most advanced logic semiconductors were manufactured in the US in 2019.

The legislation that passed in 2022 allows the US to spur new plants via grants to companies as well as by manufacturing credits.

What the credit would do is provide a refund of 25% "of an eligible taxpayer's qualified investment in an advanced manufacturing facility." It would also be structured as a refundable tax credit, meaning that companies could be receiving sizable checks next year for investments they make in 2023.

A new government portal will be online later this year where companies can apply for the credits. The new rules released this week allow companies to calculate with much greater precision how much credit they are likely to qualify for next year at tax time. A first round of rules around the credit was unveiled in March.

The Congressional Budget Office has estimated that the tax credit alone will pump over $24 billion into the semiconductor industry over the coming decade, amounting to nearly a third of the cost of the entire bill.

Some of the chip sector’s biggest names are positioned to capitalize on the billions in government largesse set to flow in the years to come.

Intel (INTC) recently hosted President Biden for the groundbreaking of their new plant in Ohio linked to the law. IBM (IBM) and Micron (MU) are also focused on building out capability in upstate New York and scored their own presidential visit.

President Biden’s chip-related travels have also taken him to Arizona, where Taiwan Semiconductor Manufacturing Company (TSMC) is among the companies planning new factories there.

The tax credits and ‘the capital stack’

The overall goal of the law is to build what Biden’s team has termed new semiconductor "clusters" across the country in the years ahead.