The administration of US President Joe Biden has announced plans to force companies that receive funds from the government’s $52 billion CHIPS and Science Act semiconductor manufacturing and research program to share some of their profits with them.
The US Commerce Department said on Tuesday that it will not only require American companies working in the lucrative microchips business, who are receiving government subsidies, to share some of their huge profits, but also, they should explain how they plan to provide affordable childcare for their workforce.
Recipients who receive more than $150 million in direct funding “will be required to share with the US government a portion of any cash flows or returns that exceed the applicant’s projections by an agreed-upon threshold,” the Commerce Department said in its funding notice.
Companies winning funding are also prohibited from using their acquired funds for dividends or stock buybacks and must provide details of any plans to buy back their own shares over five years. In recent years, Intel (INTC.O) spent more than $100 billion on buybacks, according to Democratic lawmakers targeting the company.
The Commerce Department said the government would begin accepting applications for funding in late Jun.
Commerce Secretary Gina Raimondo had said on Monday ahead of the announcement that companies must submit “a plan for how they will provide affordable and accessible childcare for their workers.”
“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 noted in her announcement.
US lawmakers approved the CHIPS Acts to help the government win the chip war with China by regaining the lead position among the global tech companies working in the semiconductor industry.
So far, US semiconductor companies have announced more than 40 new projects including nearly $200 billion in private investments to increase domestic chips production.
In the meantime, most direct funding awarded by the US government is expected to cover only between 5 to 15 percent of project capital expenditures.