U.S. says it will limit size of semiconductor chips grants

Semiconductor chips are seen on a circuit board of a pc on this illustration image taken February 25, 2022. REUTERS/Florence Lo/Illustration

WASHINGTON, July 29 (Reuters) – The U.S. Commerce Division mentioned late on Friday it would restrict the scale of presidency subsidizes for semiconductor manufacturing and won’t let companies use funding to “pad their backside line.”

On Thursday, the U.S. Home of Representatives gave ultimate approval to laws that gives $52 billion in authorities funding to spice up semiconductor manufacturing and analysis. President Joe Biden is predicted to signal the laws early subsequent week.

The Commerce Division Friday instructed chips companies awards shall be “no bigger than is critical to make sure the venture occurs right here in the US” and added it would discourage “race-to-the-bottom subsidy competitions between states and localities.”

Congressional Progressive Caucus chair Pramila Jayapal mentioned the group backed the laws after prolonged negotiations with Commerce Secretary Gina Raimondo after the group expressed issues chips firms would use funding for inventory buybacks or pay dividends.

A caucus spokeswoman mentioned Friday “progressives had been capable of vote for the invoice yesterday, assured that the division could be guaranteeing the funding couldn’t be used for company self-enrichment.”

Commerce mentioned candidates should provide detailed monetary info and projections for proposed tasks and capital funding plans: “The division will go over these with a fine-tooth comb and guarantee that firms should not padding their fashions to ask for outsized incentives.”

A Commerce Division spokesperson declined to remark past the online posting.

The division vowed to “give choice in awards to firms who decide to make future investments that develop the home semiconductor business … and never interact in inventory buybacks.”

The laws doesn’t prohibit inventory buybacks by firms receiving authorities funding however does prohibit using grant funds for the buybacks.

Corporations successful funding shall be prohibited for 10 years “from participating in vital transactions in China or different international locations of concern involving any modern semiconductor manufacturing capability or materials expansions of legacy semiconductor manufacturing capability designed to export to the U.S. and different international locations.”

Reporting by David Shepardson
Modifying by Chris Reese

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