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Lawmakers expect Commerce to “announce additional protections and refine its existing guidance in the coming weeks and months.”
A group of Democratic lawmakers wants the U.S. Commerce Department to take more steps to ensure that semiconductor companies don’t use government subsidies to carry out share buybacks.
In August, President Joe Biden signed legislation providing $52 billion in government funding to support semiconductor manufacturing and research, and a 25% investment tax credit for chip factories worth an estimated $24 billion.
“Without rigorous controls, we are concerned that CHIPS funding could result in subsidizing further buybacks, enriching executives and shareholders at taxpayer expense while undermining the legislation’s goals,” the letter, signed by Sens. Elizabeth Warren and Tammy Baldwin and Reps. Sean Casten, Jamaal Bowman, Pramila Jayapal and Bill Foster.
Commerce said it would “prioritize in valuation companies that are committed to investing in the growth of the domestic semiconductor industry in the future … and will not engage in share buybacks.”
The letter to Commerce Secretary Gina Raimondo said the largest U.S. semiconductor companies have spent hundreds of billions on share buybacks in recent years, with Intel spending more than $100 billion on buybacks since 2005.
Commerce hopes to begin seeking applications for $39 billion in semiconductor chip subsidies by February to build new facilities and expand existing U.S. production.
Commerce, which confirmed it had received the letter, said the chip companies’ prices would be “no more than necessary to ensure that the project can happen here in the United States” and would discourage “race-to-the-bottom subsidy competitions between states and localities”. .”
Chipmaker Micron Technology said Tuesday it plans to invest up to $100 billion over the next 20 years to build a computer chip factory in upstate New York.
Lawmakers expect Commerce to “announce additional protections and refine its existing guidance in the coming weeks and months,” and ask whether Commerce will require companies to certify on chip funding applications “that they will not engage in buybacks for a specified period of time.”