© Reuters. File photo: U.S. President Joe Biden holds a virtual meeting with business leaders and state governors to discuss how he and Commerce Secretary Gina Raimondo (not pictured) address supply chain issues, particularly semiconductor chips. speak when you are
By Stephen Nellis and Jane Lanhee Lee
SAN FRANCISCO (Reuters) – When the Biden administration unveiled terms on Tuesday to award $39 billion in subsidies to revamp U.S. semiconductor manufacturing, tech industry sources said some unexpected clauses could boost funding. said to reduce the attractiveness of
Chip industry sources aren’t saying the company is scrapping expansion plans to build in the US, but they’re doing everything from the requirement to share surplus profits with the government to providing affordable childcare for construction workers. , complained about the broad U.S. Department of Commerce rules for receiving funds. a person who grows plants
The issue of profit sharing is one of the most controversial issues. Industry sources said the measure came as a surprise and it was unclear how it would apply to companies, which would have to negotiate individual contracts with the U.S. government.
“There are criticisms that it could make things harder to do if it is a precursor to something deeper that[government officials]are looking for in the negotiation phase,” said one semiconductor industry source. told Reuters. problem sensitivity.
Even some of the widely-anticipated clauses, industry insiders say, have deterred some companies, such as prioritizing applicants who agree to suspend share buybacks for five years after receiving a grant. is likely to be tough. The stock buyback helped keep investors happy during turbulent market conditions in the chip industry, which turned from shortage to excess in two years.
“I think this will cause heartburn for companies,” another chip industry executive told Reuters. This subsidy would limit their flexibility. “
In announcing the rule on Tuesday, Commerce Secretary Gina M. Raimond said it is intended to ensure the money is spent properly and in ways that benefit workers.
“Through our work, we are committed to protecting taxpayer dollars, strengthening America’s workforce, and giving American businesses a platform to innovate, expand, and compete to do their best. increase.”
For profitable companies such as Taiwan Semiconductor Manufacturing Co., Ltd., which has broken ground on a major Arizona factory but has not disclosed whether it will apply for U.S. funding, the share buyback and profit-sharing provisions will be effective in the U.S. It could be a tough sell for the rest of the investor base. usa.
“It’s pretty strange for a foreign company to accept intervention in this kind of business,” said another chip industry source.
For chip companies that already plan to provide day care for factory workers, the additional requirement to provide similar benefits to construction workers building new factories is “a bit of a distraction. , all manageable,” said a first industry source. “I’m afraid it will slow down some of the things people are trying to do.”
A more troubling issue is that building a new chip factory will likely be more expensive in the US, where costs are already higher than in industrial centers such as Taiwan and Singapore.
No one expected a “free lunch,” according to a fifth industry source, but the surprise provision will force companies to process numbers again at US factories. But the source added, “I don’t think we saw anything that would cause us to walk away.”