The US Commerce Department will cap the amount of public support provided to the semiconductor industry and would forbid companies from using the money to “pad their bottom line.”
Legislation that offers US$52 billion (A$74.6 billion) in government financing to support semiconductor manufacture and research received final approval from the US House of Representatives last week.
This week, US President Joe Biden is anticipated to sign the law.
Awards be “no greater than is necessary to ensure the project proceeds here in the United States,” according to the Commerce Department, which also said it will avoid “race-to-the-bottom subsidy competitions between states and localities.”
For proposed projects and capital investment plans, applicants must provide comprehensive financial information and projections, according to Commerce: “The department will go over these with a fine-tooth comb and make sure that companies are not padding their models to ask for outsized incentives,” it said.
A spokeswoman for the Department of Commerce declined to provide any additional commentary.
In its commitment, the department promised to “provide precedence in awards to companies who resolve to make future investments that promote the local semiconductor industry… and not engage in stock buybacks.”
Although the use of grant money for stock buybacks is prohibited under the law, government-funded enterprises are nevertheless allowed to do so.
Companies that receive funds will not be allowed to do large transactions in China or other nations of concern for 10 years.
