Trump administration official says some CHIPS Act companies won't need to give up equity

Last week, the Trump administration said it might take a stake in Intel in exchange for the $10.86 billion in federal grants the company is receiving from the Chips and Science (CHIPS) Act. However, not all companies receiving funds under the same program will need to give up equity, The Wall Street Journal has reported. Companies like TSMC and Micron that increased their US investments won't have any additional obligations, according to a government official familiar with the matter.

Ealier, commerce secretary Howard Lutnick appeared to royally screw NVIDIA with comments about the company's H20 AI chips, and may have also rubbed chip giant TSMC the wrong way. "The Biden administration literally was giving Intel [money] for free, and giving TSMC money for free, and all these companies, just giving them money for free," he told CNBC on Tuesday. "Donald Trump turns that into saying, 'Hey, we want equity for the money. If we’re going to give you the money, we want a piece of the action.'"

However, TSMC may have noticed the Intel equity kerfuffle and executives reportedly held preliminary discussions about handing back subsidies if the US government asks to become a shareholder, according to the WSJ's sources. TSMC was awarded $6.6 billion for its Arizona plant that started producing chips late last year for Apple and others. However, the company recently said it would invest another $100 billion over the next four years to build three more fabrication plants, two advanced packaging facilities and a major research and development center. 

Because of that extra investment, the Trump administration won't ask for a piece of TSMC or Micron (which also expanded its US facilities in Idaho, New York and Virginia). "The Commerce Department is not looking to take equity from TSMC and Micron," an unnamed official said. 

In any case, attempts by the US government to take equity in companies will likely face legal challenges due to language in the contracts. Companies are already required to share revenue with the US government if profits rise above a certain amount. 

In another development, the US government may divert up to $2 billion in CHIPS Act funding toward critical minerals projects in the US, Reuters reported. The move aims to reduce US dependence on China for key minerals extensively used in the electronics and defense industries. "The administration is creatively trying to find ways to fund the critical minerals sector," Reuters' source said, adding that those plans could change. 

This article originally appeared on Engadget at https://www.engadget.com/big-tech/trump-administration-official-says-some-chips-act-companies-wont-need-to-give-up-equity-130041299.html?src=rss https://www.engadget.com/big-tech/trump-administration-official-says-some-chips-act-companies-wont-need-to-give-up-equity-130041299.html?src=rss