Chips companies will be lucky to get half of subsidies sought, US Commerce Secretary says

By Thomson Reuters Feb 26, 2024 | 11:17 AM

By David Shepardson

WASHINGTON (Reuters) – U.S. Commerce Secretary Gina Raimondo said Monday chips companies seeking government subsidies from a $52.7 billion program are expected get significantly less than they sought.

Raimondo said she is pushing chips companies “to do more for less” in order to fund more projects. She said her conversations with chips company CEOs typically include them asking for billions in government assistance, which she says is reasonable.

“I tell them you will be lucky to get half of that.” When they come in to finalize a deal, “where they get less than half of what they wanted and they tell me they are not feeling lucky. That’s the reality.”

Raimondo said the department is prioritizing projects that will be operational by 2030. “We are saying no for now” for projects that will not be complete before then.

The Chips and Science program approved by Congress in August 2022 includes a $39 billion program to subsidize chip production and related supply chain investments, and the awards will help build factories and increase production.

Raimondo said the department plans to invest $28 billion in leading edge manufacturing – but those companies have requested more than $70 billion. She said the department is engaged in very tough negotiations in individual companies.

“These are highly complex, first-of-their-kind facilities. The kind of facilities that TSMC, Samsung, Intel are proposing to do in the United States – these are new-generation investments – size, scale complexity that’s never been done before in this country,” Raimondo told Reuters earlier this month.

The awards can be a mix of grants, government loans and loan guarantees up to about 35% of project capital costs.

(Reporting by David Shepardson; Editing by Mark Potter)