U.S. Govt Outlines Requirements for CHIPS Act Subsidies

(Image credit: SkyWater)

The U.S. government is set to provide American chipmakers $52 billion in funding in a bid to strengthen the local semiconductor industry and lay the groundwork for its revival in America. But to get billions of dollars from the government, companies will have to agree to a variety of terms, which include not expanding their manufacturing in China, sharing profits, and providing affordable childcare. 

U.S. chipmakers that receive funds from the CHIPS fund must agree not to expand their production capacity in China for 10 years after they get the money, reports the Financial Times. This is not the only measure designed to limit American chipmakers that receive money, indicating that the U.S. government reserves the right to expand its stipulation list beyond China. 

"Recipients will be required to enter into an agreement restricting their ability to expand semiconductor manufacturing capacity in foreign countries of concern for a period of 10 years after taking the money," said Gina Raimondo, the U.S. commerce secretary. "[Recipients must not] knowingly engage in any joint research or technology licensing effort with a foreign entity of concern that involves sensitive technologies or products." 

The U.S. government does not intend to fund the entirety of fab thse projects: The grants are projected to total 5% - 15% of capital expenditures per project and will not exceed 35% of a product's total cost. Meanwhile, companies will be able to apply for a tax credit reimbursing 25% of their project's construction cost, reports the New York Times. Keeping in mind that modern fabs can still cost $10 billion or more, this is still a lot of money. 

Companies who win government grants will have to hit certain milestones on time, refrain from stock buybacks (as the Commerce Department will prefer to give funding to companies who do not), and provide affordable childcare for workers. Furthermore, they will have to share unexpected excess profits with the government, a move designed to ensure that companies do not exaggerate the costs of these projects. 

For now, the Department of Commerce has released general guidelines for companies set to receive funding from the government and intends to disclose more detailed rules in the coming weeks. 

"We're going to be releasing very detailed regulations in the next few weeks that give companies a clearer sense of what the red lines are," Raimondo said, according to Reuters.



Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • bit_user
    Sounds promising, overall.

    The childcare aspect is the only part that seems out-of-place. I'd rather employers decide for themselves whether that's a benefit worth offering to attract and retain the workers they need. I know the need is real, but given the small proportion of the labor force that will be employed through this funding, it seems like a small drop in a big bucket.
  • Kamen Rider Blade
    Needs a 100 or 1000 year ban on expansion in China instead of 10 years
  • bit_user
    Kamen Rider Blade said:
    Needs a 100 or 1000 year ban
    A lot can change in 10 years.

    Anyway, if the US is to maintain a viable semiconductor industry, this funding will need to be followed by a couple more rounds before then. If it still makes sense to attach such conditions, that additional funding could be used to extend the ban.
  • PlaneInTheSky
    That should exclude TSMC since they have major factories in mainland China.
  • ex_bubblehead
    It shouldn't need to be said but we have several that don't like to play by the rules and there's already been one expulsion.

    Keep ALL politics out of these discussions or the thread will be locked and violators sanctioned as appropriate. This will be the only warning issued.

    Play nice, or not at all.