A group of Congress members recently called on the U.S. Department of Commerce to prevent funding for the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act from being used to subsidize corporate buybacks.
Specifically, the lawmakers are asking the head of the CHIPs Program Office within the Commerce Department to consider several provisions when finalizing its Notice of Funding Opportunity and implementing the CHIPS program. They request that the office ensure that CHIPS fund recipients do not engage in stock buybacks for at least 10 years. They also ask that the office requires CHIPS awardees to certify that they will not conduct stock buybacks by checking a box on the application form.
“Secretary Raimondo assured the public that the Department of Commerce intends to be vigilant and aggressive in protecting taxpayers’ and that it would ‘look after every nickel of taxpayer money.’ Meeting this commitment and realizing the economic and national security objectives of the CHIPS Act will require the Department to use its authority to ensure that CHIPS funds are not used to subsidize stock buybacks and shareholder distributions, whether directly or indirectly,” the lawmakers wrote to Michael Schmidt, Director of the CHIPS Program Office at the U.S. Department of Commerce.
The letter was signed by U.S. Sens. Elizabeth Warren (D-MA), Tammy Baldwin (D-WI), Bernie Sanders (I-VT), Ed Markey (D-MA), and U.S. Reps. Sean Casten (D-IL), Bill Foster (D-IL), Pramila Jayapal (D-WA), and Jamaal Bowman (D-NY).
The lawmakers said that the five largest semiconductor companies — Intel, IBM, Qualcomm, Texas Instruments, and Broadcom — have spent nearly $250 billion, or 71 percent of their net income, on buybacks between 2011 and 2020. Buybacks by CHIPS recipients could undermine the critical economic and national security goals of the CHIPS Act while enriching corporate executives and shareholders at taxpayers’ expense, they added.