August 1, 2022
The U.S. Commerce Department has announced plans to limit the size of government subsidies for semiconductor production.
The Commerce Department said that the award to chip companies will be “no larger than is necessary to ensure the project happens here in the United States.” The effort is therefore aimed at “race-to-the-bottom subsidy competitions between states and localities.”
According to the Commerce Department, applicants must provide detailed financial information and forecasts on proposed projects and capital investment plans. “The department will go over these with a fine-tooth comb and make sure that companies are not padding their models to ask for outsized incentives.”
The ministry promised to “give preference in awards to companies who commit to make future investments that grow the domestic semiconductor industry … and not engage in stock buybacks.”
For any company that is able to secure chip financing, they will be prohibited for 10 years “from engaging in significant transactions in China or other countries of concern involving any leading-edge semiconductor manufacturing capacity or material expansions of legacy semiconductor manufacturing capacity designed to export to the U.S. and other countries.”
The sources for this piece include an article in Reuters.
