Lawmakers are pushing US trade for tougher controls on semiconductor chip subsidies

WASHINGTON, Oct 5 (Reuters) – A group of Democratic lawmakers is asking the U.S. Commerce Department to take additional steps to ensure that semiconductor companies don’t use government subsidies to make stock buybacks.

In August, President Joe Biden signed legislation providing $52 billion in government funding to boost semiconductor manufacturing and research and a 25 percent investment tax credit for chip factories valued at $24 billion.

“Without rigorous controls, we are concerned that CHIPS funding could lead to a subsidy for additional buyouts, enriching executives and shareholders at the expense of taxpayers while undermining the legislation’s goals,” states the letter signed by Senators Elizabeth Warren and Tammy Baldwin and Representatives. Sean Casten, Jamaal Bowman, Pramila Jayapal

and Bill Foster.

Commerce said it would “give preference in the awards to companies committed to making future investments that will grow the domestic semiconductor industry … rather than share buybacks.”

The letter to Commerce Secretary Gina Raimondo notes that the biggest U.S. semiconductor companies have spent hundreds of billions on share buybacks in recent years, with Intel ( INTC.O ) spending more than $100 billion on buybacks since 2005.

Commerce hopes to begin seeking applications by February for $39 billion in semiconductor chip subsidies to build new facilities and expand existing U.S. production.

Commerce, which confirmed receipt of the letter, said the chip companies’ awards would be “no greater than necessary to ensure that the project takes place here in the United States” and would discourage “subsidy competitions between states and localities”. .”

Chipmaker Micron Technology ( MU.O ) said on Tuesday it plans to invest up to $100 billion over the next 20-plus years to build a computer chip factory complex in upstate New York.

The 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 applications for chip funding “that they will not make acquisitions for specified period of time.”

Report by David Shepardson. Edited by Kim Coghill

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