The Biden administration launched its massive effort to outcompete China in semiconductor manufacturing Tuesday, offering $39 billion in funding incentives for companies seeking to build manufacturing plants in the US.

Authorized by the CHIPS and Science Act last year, the Commerce Department opened the application process Tuesday for companies jockeying for a share of the funding. This first round prioritizes applicants seeking to build domestic chip manufacturing facilities that can ensure the billions in taxpayer money are protected and leveraged to advance US national security goals. 

“When we have finished implementing CHIPS for America, we will be the premier destination in the world where new leading-edge chip architectures can be invented in our research labs, designed for every end-use application, manufactured at scale and packaged with the most advanced technologies,” Commerce Secretary Gina Raimondo said in a statement Tuesday.  

In a press release Tuesday, the Commerce Department explained how it will be evaluating applicants for the first time. Companies applying for more than $150 million in funding will be required to provide childcare for construction and factory workers, restrict stock buybacks, and share part of their profits with the government if they are more profitable than projected. Companies building these factories are expected to use union workers.

“Applications will also be evaluated for commercial viability, financial strength, technical feasibility and readiness, workforce development, and efforts to spur inclusive economic growth,” the press release said. “CHIPS for America awards will be made as soon as applications can be rigorously evaluated and negotiated.”

The Biden administration plans to open up additional funding rounds this spring and fall to boost investment in chip-making materials and research facilities. Major chip manufacturers, like GlobalFoundries and Intel, have already leveraged the industry’s excitement over the money to strike new commercial partnerships and build factories across the US.

In a statement Tuesday, Al Thompson, Intel’s vice president of US government relations, welcomed the program’s launch, calling it “an important step for American semiconductors to be globally competitive.”

Intel declined to comment on whether it planned to apply for the funding.

“Not a single public dollar should help executives goose their stock prices.”

Progressives like Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) sought to limit stock buybacks from companies receiving CHIPS Act funding when it was being debated in Congress this year. While the Commerce Department’s plans ban grants for stock buybacks, lawmakers fear the agency hasn’t gone far enough. 

“Leveraging federal funds for #CHIPS manufacturing to support workers and protect taxpayers is critical,” Warren said in a tweet Tuesday, but called the department’s rules “disappointing.”

“Not a single public dollar should help executives goose their stock prices,” Warren said. 

Other Democrats applauded the program’s launch. 

“Today’s Notice of Funding Opportunity is a crucial step to unleashing the promise of the CHIPS and Science Act to create good-paying jobs right here at home and end our dangerous dependence on semiconductors manufactured abroad,” Rep. Frank Pallone Jr. (D-NJ) said in a statement Tuesday. 

As part of Tuesday’s announcement, the Commerce Department laid out goals it expects to meet in the next 10 years by administering the money. Specifically, the department plans to create two new “large-scale clusters” of chip fabs that produce “leading-edge” memory chips as well as current-generation and mature-node chips.



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