(Reuters) - The Biden administration said on Tuesday it would extend a semiconductor manufacturing tax break to producers of solar wafers, thin silicon slices used to make solar panels that are primarily produced in China.

WHY IT'S IMPORTANT

The move is the latest effort by the administration to build out a domestic solar supply chain as part of its climate change and jobs agenda.

Manufacturers have announced dozens of solar panel facilities since 2022, thanks to new subsidies for clean energy manufacturing, but the industry has called for more support for wafer-producing facilities with more complex manufacturing processes which require larger investments.

CONTEXT

The Treasury Department's new rules for the 48D advanced manufacturing investment credit created by the 2022 Chips and Science Act will allow solar ingot and wafer makers to claim a 25% tax break for new facilities. Those factories are also eligible for a separate manufacturing tax credit created by the 2022 Inflation Reduction Act based on the number of components produced.

KEY QUOTE

"The Biden-Harris Administration's efforts will drive significant investment in domestic solar ingot and wafer manufacturing capacity, currently dominated by China, help meet our economic and national security goals, and support thousands of good-paying jobs across the country," Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition, said in a statement.