Chip design, firmware & signal integrity
Estimate your credit →Designing chips, boards, firmware, and test methods involves resolving uncertainty about timing, power, signal integrity, and yield through extensive simulation and testing.
The credit is calculated on qualified research expenses (QREs) — primarily wages for engineers and technical staff who spend time on qualifying activities, plus supplies, cloud/compute, and 65% of qualified contract research.
The table below lists the business components that most often qualify, a common example, and the technical uncertainty that makes each one defensible.
| Business component | Example | Technical uncertainty |
|---|---|---|
| Chip / IC design | New ASIC, SoC, or analog IC | Will the design meet timing, power, and area targets? |
| Firmware & embedded software | Device firmware, RTOS integration | Will firmware meet real-time and reliability needs? |
| PCB & hardware design | Multi-layer or high-speed board | How to maintain signal integrity? |
| Signal integrity & RF | RF front-end, high-speed interconnect | How to control noise, EMI, and integrity? |
| Packaging & thermal design | Advanced packaging, thermal management | Will it manage heat and density? |
| Test & validation methods | New test methodology or ATE program | How to validate at the needed speed and coverage? |
| Power management | New power IC or regulation scheme | Will it meet efficiency and thermal targets? |
| Process / fab development | New fabrication process step | Will the process yield within spec? |
Potentially qualifying: A team prototypes alternative chip layouts and runs simulations or test silicon to determine how to meet an unresolved timing and power constraint.
Generally not qualifying: Reproducing an established reference PCB, making a routine component substitution, or performing recurring production inspection after design freeze typically involves no qualifying experimentation.
Find your own job titles below. Each row shows the wage category a role usually falls under and the kinds of work that typically do and do not count. Titles alone never make wages eligible; the activity must meet the four-part test.
7 of 7 roles shown
| Role | What they do | Wage category | Typically qualifies | Typically does not |
|---|---|---|---|---|
| Develops circuit designs that must meet uncertain technical targets. | Direct research | Experimental circuit architectures, Power and timing design alternatives +1 more | Routine design reuse, Known layout changes +1 more | |
Typically qualifies
Typically does not
|
||||
| Tests board and component configurations against product requirements. | Direct research | Uncertain board architecture, Thermal and electrical performance trials +1 more | Catalog part substitutions, Routine assembly instructions +1 more | |
Typically qualifies
Typically does not
|
||||
| Finds ways to preserve signal quality under demanding conditions. | Direct research | Experimental RF paths, Uncertain interference mitigation +1 more | Routine tuning to known settings, Standard certification paperwork +1 more | |
Typically qualifies
Typically does not
|
||||
| Develops software that makes new hardware function reliably. | Direct research | Experimental device-control methods, Uncertain real-time scheduling +1 more | Routine patch releases, Known driver configuration +1 more | |
Typically qualifies
Typically does not
|
||||
| Tests fabrication methods for new or improved devices. | Direct research | Experimental process windows, Uncertain materials integration +1 more | Routine process monitoring, Established fab operation +1 more | |
Typically qualifies
Typically does not
|
||||
| Sets up and measures experiments on prototypes and test devices. | Direct support | Research-specific fixture preparation, Prototype measurements +1 more | Routine end-of-line tests, Repair work +1 more | |
Typically qualifies
Typically does not
|
||||
| Directly reviews and supervises experimental engineering work. | Direct supervision | First-line technical supervision, Review of experimental alternatives +1 more | Staff reviews, Vendor negotiations +1 more | |
Typically qualifies
Typically does not
|
||||
Wage categories follow IRC Section 41. Only the portion of time spent on qualified research counts, and the percentage must be documented.
Illustrative example using sample figures. Your actual credit depends on your facts; see Form 6765 and consult a tax professional.
The IRS requires qualifying research to satisfy four tests. Here's how they typically map for this industry:
The activity aims at improving a product, process, software, or technique used in the business — not just a business outcome.
The work relies on principles of engineering, computer science, biology, chemistry, or another hard science to resolve uncertainty.
There was genuine uncertainty at the outset about whether — or how — the component could be built or improved.
The team evaluated alternatives: A/B tests, prototypes, benchmarks, simulations, or iterative design-build-test cycles.
Take these into a 15-minute conversation with your team.
The last question matters most. Customer-funded work and work performed outside the US are generally excluded. Funded work is excluded to the extent your business does not bear the financial risk or does not retain substantial rights in the results.
Potentially, if the work resolves uncertainty about technical capability, method or design through experimentation. A change need not be new to the entire electronics industry.
They can be part of qualifying experimentation when they evaluate technical alternatives. Keep the reasons for each iteration and the results, including failed approaches.
Routine quality control and production monitoring generally are not qualified research. Distinguish those activities from experimental development of a new or improved process.
Research performed outside the United States generally is excluded. For eligible domestic contract research, review the actual services, economic risk and retained rights rather than treating every foundry invoice as research.
Some nondepreciable materials used in qualified research may qualify as supplies, depending on the facts. Depreciable equipment and production tooling are not automatically research supplies.
Keep design revisions, simulation results, test plans, lab measurements and supported time allocations. Link the records to the uncertain technical goals and the alternatives tested.
Most companies underestimate what they can claim. Our study covers every qualifying role, every component, and every year still open for amendment.
Get your free estimate →