MEATY CLIFFNOTES

> ^(The Commerce Department on Tuesday) ^(released its plans) ^(to begin accepting applications in late June for a $39-billion manufacturing subsidy program. The law also creates a 25% investment tax credit for building chip plants, estimated to be worth $24 billion.)
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> ^(Recipients who receive more than $150 million in direct funding "will be required to share with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections by an agreed-upon threshold," the department said.)
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>^(Companies winning funding are also prohibited from using chips funds for dividends or stock buybacks, and must provide details of any plans to buy back their own shares over five years. The department will consider an "applicant’s commitments to refrain from stock buybacks.")
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>^(Democratic lawmakers have noted that the largest U.S. semiconductor companies have poured hundreds of billions of dollars into stock buybacks in recent years, with Intel) ^((INTC.O)) ^(spending more than $100 billion on buybacks since 2005. Intel also pays a dividend.)
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>^(It's not uncommon for states to require specific employment targets as a condition for tax subsidies, but the Biden administration is a significant expansion.)
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>^(Commerce Secretary Gina Raimondo said companies must submit a plan that includes an outline of workforce needs. Applicants seeking more than $150 million in direct funding must submit "a plan for how they will provide affordable and accessible childcare for their workers.")
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>^(Applicants must address six program priority areas including plans "to commit to future investment in the U.S. semiconductor industry, including to build R&D facilities in the United States.")
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>^(Applicants should also "create opportunities for minority owned, veteran-owned, and women-owned businesses; demonstrate climate and environmental responsibility; invest in their communities by addressing barriers to economic inclusion; and commit to using iron, steel, and construction materials produced in the United States.")
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>^(Most direct funding awards are expected to range between 5% and 15% of project capital expenditures. Commerce said it generally expects the total amount of an award including loan or loan guarantee, to not exceed 35% of project capital expenditures.)
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>^(Raimondo noted that companies winning awards will be required to enter into agreements restricting their ability to expand semiconductor manufacturing capacity in foreign countries of concern like China for 10 years after winning funding. They cannot engage in any joint research or licensing efforts with a foreign entity of concern involving sensitive technologies.)