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Commerce Secretary Raimondo says companies that give up stock buybacks for 5 years will be given preferential treatment in the $52 billion CHIPS program.

WorldAsiaCommerce Secretary Raimondo says companies that give up stock buybacks for 5 years will be given preferential treatment in the $52 billion CHIPS program.
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WASHINGTON – US Commerce Secretary Gina Raimondo said companies that voluntarily agree to give up stock buybacks for five years will get preferential treatment when the agency pays back $52 billion authorized under the CHIPS and SCIENCE Act.

Raimondo said stock buybacks as part of a $39 billion manufacturing subsidy program are one factor being taken into account. The agency, which released its criteria last week, is also considering recruitment and training strategies as well as childcare benefits for employees, among other issues. The law also creates a 25% investment tax credit for the construction of chip plants, estimated at $24 billion.

The act is designed to boost domestic production of semiconductor chips and reduce US dependence on Asia for the technology, which is used in everything from microwave ovens to automobiles. She said the program was not a “blank cheque”.

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“The law says these companies are not allowed to use taxpayer money to do buybacks or pay dividends. Also, we are giving preference to companies that voluntarily say they will buyback for five years Will not.” Raimondo told CNBC Sarah Eisen on Monday. “Why? Because it’s about increasing research and development in America. The money should be used to expand in America, to innovate the rest of the world. Invest in R&D and your employees, not buybacks.” “

The program also gives preference to companies that use unionized workers or have labor agreements, which he said helps ensure that projects will be completed on time and on budget.

“We don’t need a union, we don’t need a project labor agreement,” she said. “We are preferring it because we know from history and from the fact that when you have a project labor agreement, it is likely that it will be done on time, on budget, by the most skilled workforce in America.”

In February, Raimondo said that the US CHIPS Act funding would be invested in manufacturing At least two large scale semiconductor manufacturing clusters by 2030 to enhance the country’s competitiveness with leading manufacturers such as Taiwan.

“Right now we make zero leading-edge semiconductors in the United States,” he said. “We want to be the only country in the world where we lead in research and development, software design, and have leading manufacturing and packaging on our shores. And we will achieve that goal. I have no doubt about it.”

department of commerce started Accepting Application for Chips Funding at the end of February

– Reuters contributed to this article.

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