US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House.
The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far.
The next two months would prove critical for more than 20 companies still in the process of making deals. Some of them, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and GlobalFoundries Inc, have wrapped up negotiations and expect to make final award announcements soon, people familiar with the matter said.
Photo: Florence Lo, Reuters
Others — including Intel, Samsung and Micron Technology Inc — are still working through some substantive details of their contracts, according to other people.
Officials have long aimed to square away as many deals as possible by the end of this year, allowing funds to start flowing to companies that hit specific milestones. Trump’s victory now adds urgency to the situation, because the Biden team wants to insulate its industrial policy initiatives from partisan politics. Chipmakers also want to avoid renegotiating terms with a new administration.
The Trump campaign hasn’t clarified its stance on the issue since the election, though the general consensus among industry lobbyists is that the act will remain largely intact.
After all, it was Trump’s first administration that courted TSMC, the world’s leading chip manufacturer, to build factories in Arizona. US federal regulations also will compel his second administration to spend the CHIPS Act money appropriated by Congress, which includes the full US$39 billion for direct awards through fiscal 2026.
Compared with Biden’s other industrial policy initiatives, the CHIPS Act enjoys broad-based support.
A White House spokesperson pointed to that bipartisan backing in a statement, saying that the law is a cornerstone of the administration’s “commitment to America’s economic and national security.”
Republicans could seek to strip out what they see as social priorities in the act — things such as requirements for childcare facilities or expectations that companies would consult with local labor unions and work to limit the environmental impact of their factories.
The concern for companies is not so much that Republican reforms would change their top-line subsidy numbers, but rather that they would further delay the funding — money that some chip executives already feel has taken too long to arrive.
A number of projects have reached their initial benchmarks, a senior administration official has said, which means the first tranches of money can be disbursed as soon as contracts are signed.
In Intel’s case, the talks hinge in part on so-called “change of control” provisions, people familiar with the matter said. Those terms spell out what would happen if the company spins off its manufacturing business or is acquired in whole or in part.
Intel CEO Pat Gelsinger has vowed to keep the company together, and the company in a statement said that it would continue to work with the Biden administration to finalize its award.
Meanwhile, Micron is resisting a requirement to join the new US National Semiconductor Technology Center, a US$5 billion CHIPS Act research and development initiative, other people said. Membership was a condition of the preliminary awards, and the company is one of several now balking at the terms.
Micron in a statement said that it continues to work closely with government officials to finalize its incentive package.
Samsung’s CHIPS Act talks have picked up recently after a slowdown earlier this year, people familiar with the matter said, adding that at one point in fall, company and government officials went more than one month between due diligence meetings.
Other outstanding issues include a labor provision called the Davis-Bacon Act, which sets prevailing wages for federally supported construction.
Companies also are seeking clarity on how much business they could do with China. Last year, the Biden administration issued national security guardrails limiting how much CHIPS Act winners could expand facilities in China, but there are still specific details to work out in contracts.
The Biden administration’s goal is to reach commitments for distributing as much of the money as possible before leaving office. That would generally protect companies against any changes, barring an act of Congress or compliance failures by funding recipients.
It’s possible that Trump’s commerce department could try to terminate and renegotiate federal contracts that are already signed, but his team hasn’t expressed a desire to do so.
No matter what, though, Biden officials recognize that some of the final work — including actually handing out most of the money — will fall to Trump appointees.
“Our team continues to implement this bipartisan law in accordance with statute,” said a spokesperson for the Commerce Department, which unveiled two more preliminary CHIPS Act awards on Friday. The agency “will have more announcements in the coming weeks,” they said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
RSS