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.
