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

The Biden administration launched its massive effort to take on China in semiconductor manufacturing on Tuesday, offering $39 billion in financing incentives to companies seeking to build factories in the United States.

Courtesy of the CHIPS and Science Act last year, the Commerce Department opened the application process on Tuesday to companies vying for a share of the funding. This first round prioritizes applicants seeking to build domestic chip manufacturing facilities that can ensure the protection and enhancement of billions in taxpayer money to achieve US national security goals.

“When we finish implementing CHIPS for America, we will be the premier destination in the world where new advanced chip architectures can be devised in our research labs, designed for every end-use application, manufactured at scale and packed with the most advanced chips,” Commerce Secretary Gina Raimondo said in a statement Tuesday.

In a press release Tuesday, the Commerce Department explained how first-time applicants will be evaluated. Companies applying for more than $150 million in financing will be required to provide child care to construction and factory workers, limit share buybacks, and share a portion of their profits with the government if they are more profitable than expected. The companies that build these plants are expected to employ unionized workers.

“Applications will also be evaluated on commercial viability, financial strength, technical viability and readiness, workforce development, and efforts to stimulate inclusive economic growth,” the press release said. “CHIPS for America Awards will be presented once applications have been rigorously evaluated and negotiated.”

The Biden administration plans to open additional funding rounds this spring and fall to boost investment in chip materials and research facilities. Major chipmakers such as GlobalFoundries and Intel have taken advantage of the industry’s excitement over funds to strike new business partnerships and build factories across the United States.

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

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

“No single public dollar should help CEOs drive up their share prices.”

Progressives like Sens. Elizabeth Warren (R-Massachusetts) and Bernie Sanders (I-VT) sought to limit stock buybacks from companies that receive CHIPS funding when it was debated in Congress this year. While the Commerce Department’s plans prohibit stock buyback grants, lawmakers fear the agency hasn’t gone far enough.

Warren said Tweet Tuesdaybut called the department’s rules “disappointing”.

“No single public dollar should help CEOs lower their share prices,” Warren said.

Other Democrats applauded the program’s launch.

“Today’s notification of a funding opportunity is a critical step to unlock the promise of the CHIPS Act and the Science Act to create well-paying jobs here at home and end our dangerous dependence on semiconductors manufactured abroad,” Rep. Frank Pallone Jr. (D-NJ) said in a statement Tuesday.

As part of Tuesday’s announcement, the Commerce Department set goals it expects to achieve in the next 10 years through fund management. Specifically, the division plans to create two new “large-scale” fab chips that produce “high-end” memory chips in addition to current-generation chips and mature node chips.

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