PROVIDENCE — US Commerce Secretary Gina M. Raimondo on Tuesday vowed to “claw back” federal funding if semiconductor companies violate restrictions on billions of taxpayer dollars meant to boost US semiconductor manufacturing and scientific research.
“This is not a blank check for companies. This is not for them to pad their bottom line,” Raimondo, a former Rhode Island governor, said during a White House press briefing. “There are clear guardrails on this money, and the Department of Commerce intends to be vigilant and aggressive in protecting taxpayers.”
During the news conference, Raimondo faced questions about what strings the Commerce Department will place on the $52.7 billion contained in the CHIPS and Science Act of 2022, which aims to boost domestic high-tech manufacturing and compete with China.
The measure includes $39 billion in manufacturing incentives, and Raimondo said that public money cannot be used for stock buybacks, and it is not intended to replace private capital.
“That is key,” she said. “Taxpayer funds are only used to fill gaps and secure other funding as loan guarantees, not to replace private capital.”
The public money is meant help companies maximize the scale of their projects, Raimondo said. “We are going to be pushing companies to go bigger and be bolder,” she said. “So if a company already has funding now for a $10 billion project, we want them to think bigger and convince us how they can go from $10 billion to $50 billion with use of the taxpayer financing.”
The Commerce Department has the ability to “claw back” money if the companies don’t meet the federal requirements, Raimondo said.
“Make no mistake about it,” she said. “We will use that claw-back authority if, after being given money, they fail to start their project on time, fail to complete their project on time, fail to meet the commitments that they’ve made.”
Raimondo also emphasized that the CHIPS funds cannot be used in ways that would compromise national security. She said they can’t build “leading edge” technologies in China for a period of 10 years, and they can only expand “mature” existing facilities in China to serve the Chinese market.
She noted that pandemic-related chip shortages shut down auto factories over the past couple of years and sent prices soaring.
“With this funding, we are going to make sure the United States is never again in a position where our national security interests are compromised or key industries are immobilized due to our inability to produce essential semiconductors here at home,” Raimondo said.
The US “innovation ecosystem” has been withering for decades, Raimondo said. But with this funding, “We will add rocket fuel to our global competitiveness,” she said.
The Commerce Department plans to begin receiving applications from companies for the new federal funding no later than February 2023. Raimondo said the department has begun recruiting a team of 50 experts who will review the proposals submitted by semiconductor companies and make sure they follow the restrictions.
The country is already beginning to see investments in the domestic production of semiconductors, she said, noting she attended a ribbon-cutting in August at onsemi’s new silicon carbide production facility in Hudson, New Hampshire.
The CHIPS Act will end up producing “tens of thousands of good paying manufacturing jobs” and more than 100,000 construction jobs, she said.
“The pipeline for these jobs will expand to include people who historically have not had a chance to participate in this industry, including women, people of color, veterans, and people who live in rural areas,” Raimondo said. “That is explicitly required in statute, and we will carry out Congress’s intent.”
On Aug. 22, Raimondo returned to Rhode Island and spoke to union leaders and elected officials at the Plumbers and Pipefitters Local 51 hall, in East Providence, during an event focused on the Rhode Island Women’s Council of the Rhode Island Building and Trades Council.
“I am absolutely committed to making sure women get their fair share of those jobs,” she said at that event. “I am going to put every string attached to make sure we hit the goal of having one-third or one-half of those jobs going to women.”