The Commerce Department released the rules Tuesday ahead of doling out $39 billion in incentives, which are aimed at helping pay for semiconductor factories in the US. Some of the biggest chip producers such as Intel Corp. had lobbied for the funding package, which passed last year, but now they’re learning the consequences and risks of taking the cash.
The hope of the Chips and Science Act is to revitalize US chip manufacturing after decades of production shifting to Asia. But the Biden administration also sees it as an opportunity to implement some of its social policy priorities. For instance, the White House has said that companies accepting the money must require day-care activities near new manufacturing sites.
Companies that get more than $150 million in direct funding will also be required to share with the US government a portion of any cash flows or returns that exceed their projections by an agreed-upon threshold.Companies will have to return all the funding they receive if they “knowingly engage in any joint research or technology licensing effort with a foreign entity of concern that raises national security concerns.
Chipmakers such as Texas Instruments have won over investors with long-term commitments to return all of their surplus cash to shareholders in the form of dividends and repurchases. Others, such as Intel, have long offered generous dividends— though that company has had to pare back its payout to preserve cash for its turnaround plan.Raimondo wants applicants to explain why they need government money, rather than just why they want it.