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Chips firms seek double $28 billion US subsidies available, Commerce Dept says

FILE PHOTO: U.S. Secretary of Commerce Raimondo vists China

By David Shepardson

WASHINGTON (Reuters) -U.S. Commerce Secretary Gina Raimondo said on Monday most chips companies seeking government subsidies will get significantly less than they have sought, since the government received requests for more than double the $28 billion it plans to award.

Raimondo said companies in leading edge chips manufacturing have requested more than $70 billion. She said the department is engaged in tough ongoing negotiations with individual companies.

Raimondo said she was pushing leading edge 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," Raimondo said. 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... We have to be tough with companies."

Raimondo said the department is prioritizing projects that will be operational by 2030. "We are saying no for now" for projects to longer-range projects.

Raimondo said the department now estimates the funding will ensure the U.S. produces 20% of the world's leading edge logic chips by 2030, up from zero today.

She said more than 600 companies submitted statements of interest for funding but a "significant majority" will not receive funding including many worthy projects.

The $52.7 billion 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.

Earlier this month, Raimondo said Commerce would award a $1.5 billion grant to GlobalFoundries, the first major award.

"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 this month.

The awards can be a mix of grants, government loans and loan guarantees up to about 35% of project capital costs. Raimondo joked that because she was taking a hard line "I am not on the Christmas card list of a lot these CEOs of these chips companies because we are squeezing every dollar."

(Reporting by David ShepardsonEditing by Mark Potter and David Gregorio)