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Ministry of Commerce: will Limit the Size of Government Subsidies to Chip Companies

Update time : 2022-08-02 13:56:26

According to Reuters, the U.S. Department of Commerce said on Friday (29) that it would limit the size of subsidies for semiconductor manufacturing under the chip bill and would not allow companies to use the funds to "pad".

Prior to that, on July 28, the U.S. House of Representatives gave final approval to legislation providing $52 billion in government funding to boost semiconductor manufacturing and research. President Biden is expected to sign the bill early this week.
The Commerce Department told Electronic Components companies that the subsidies would "not exceed the amount that would be generated to ensure that the program operates within the United States," adding that the department would discourage "competitive subsidies among states and localities," according to the report.
Pramila Jayapal, chairman of the Congressional Progressive Caucus, said the group supported the legislation after lengthy negotiations with Commerce Secretary Gina Raimondo, following concerns that chip companies would use the money to buy back stock or pay dividends.
A caucus spokesman said Friday that "progressives were able to vote for the bill, confident that the department would ensure that the funds could not be used for corporate self-enrichment."
The U.S. Department of Commerce said applicants must provide detailed financial information and projections for proposed projects and capital investment plans: "The department will carefully review this information and ensure that companies are not padding their size in order to claim excess awards."
The Commerce Department also promised to give preference in subsidies to companies that "commit to invest in the development of the domestic semiconductor industry in the future," rather than to companies that make stock buybacks.
However, the legislation does not prohibit companies receiving government funding from repurchasing stock, but it does prohibit grant funds from being used for repurchases.
Companies receiving funds would be prohibited for 10 years from engaging in "significant transactions in China or other relevant countries involving the expansion of any leading semiconductor manufacturing capability or materials intended for export to the United States and other countries for traditional semiconductor manufacturing capabilities.

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