President Joe Biden’s $39 billion semiconductor project is open for trade

The Biden administration on Tuesday launched its massive effort to beat China in semiconductor production, offering $39 billion in financing incentives to companies looking to build factories in the US.

Authorized by the CHIPS and Science Act last year, the Department of Commerce on Tuesday opened the application process for companies seeking a portion of the funding. This first round prioritizes applicants who want to build domestic chip manufacturing facilities that can ensure billions in taxpayer dollars are protected and used to further U.S. national security goals.

“When we complete the implementation of CHIPS for the Americas, we will be the premier destination in the world where new industry-leading chip architectures can be invented in our research labs, designed for every end-use application, manufactured at scale and packaged with the most advanced technologies,” said Commerce Secretary Gina Raimondo in a statement Tuesday.

In a press release Tuesday, the Department of Commerce explained how it will evaluate first-time applicants. Companies applying for more than $150 million in financing will have to provide child care for construction and factory workers, limit share buybacks and share a portion of their profits with the government if they are more profitable than expected. Companies building these factories are expected to employ union workers.

“Applications will also be assessed for commercial viability, financial strength, technical feasibility and readiness, workforce development and efforts to drive inclusive economic growth,” the press release said. “CHIPS for America awards will be made once applications can be thoroughly evaluated and negotiated.”

The Biden administration plans to open additional funding rounds this spring and fall to boost investment in chip-making materials and research facilities. Major chipmakers, such as GlobalFoundries and Intel, have already used the industry’s excitement about the money to form new commercial partnerships and build factories in the US.

In a statement Tuesday, Al Thompson, Intel’s vice president of U.S. government relations, welcomed the launch of the program, calling it “an important step for U.S. semiconductors to be globally competitive.”

Intel declined to comment on whether it plans to apply for the funding.

“No public dollar should help executives lower their stock prices.”

Progressives like Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) tried to limit share repurchases of companies receiving CHIPS Act funding when it was discussed in Congress this year. While the Commerce Department’s plans prohibit stock buyback subsidies, lawmakers fear the agency hasn’t gone far enough.

“Using federal funds for #CHIPS manufacturing to support workers and protect taxpayers is critical,” Warren said in a tweet on tuesdaybut called the department’s rules “disappointing”.

“No public dollar should help executives lower their stock prices,” Warren said.

Other Democrats applauded the launch of the program.

“Today’s notice of funding opportunity is a critical step in delivering on the promise of the CHIPS and the Science Act to create high-paying jobs here at home and end our dangerous reliance on foreign-manufactured semiconductors,” Representative Frank Pallone Jr. (D- NJ) said in a statement Tuesday.

As part of Tuesday’s announcement, the Department of Commerce set targets it expects to meet over the next 10 years by managing the money. Specifically, the department plans to create two new “large-scale clusters” of chip factories that will produce “leading-edge” memory chips, as well as current-generation chips and mature nodes.






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