The U.S. government announced Tuesday that it will require companies that receive subsidies from its $52 billion semiconductor bill to share excess profits and explain how they plan to provide affordable child care.
The U.S. Department of Commerce on Tuesday unveiled its application program for one of the $39 billion manufacturing subsidy programs, which will begin accepting applications in late June. The program also provides a 25 percent investment tax credit for chip plant construction, estimated to be worth $24 billion. The Chip Act plays a central role in the Biden administration’s efforts to bring semiconductor manufacturing back to the United States.
Chip companies that receive more than $150 million in direct funding “will be required to share with the U.S. government a portion of any cash flow or return that exceeds the agreed-upon threshold expected by the applicant,” according to the Commerce Department. The Commerce Department expects that “upward sharing will be material only if the project significantly exceeds its projected cash flow or return and will not exceed 75 percent of the recipient’s direct funding award.”
Meanwhile, chip companies receiving subsidies are prohibited from using the funds received for dividends or stock buybacks, and companies must provide details of any plans to repurchase their own stock over the next five years. The U.S. Department of Commerce will take into account “the applicant’s commitment not to repurchase stock.
