![U.S. Sec. Gina Raimondo of Commerce on the CHIPS Act: This is not a blank check](https://image.cnbcfm.com/api/v1/image/107203717-16781227901678122786-28468395287-1080pnbcnews.jpg?v=1678123780&w=750&h=422&vtcrop=y)
WASHINGTON — U.S. Secretary of Commerce Gina Raimondo said firms that voluntarily comply with waive stock buybacks for five years will receive preferential treatment when the agency spends $52 billion authorized under the CHIPS and Science Act.
Raimondo said the share buyback is one of the aspects considered in the $39 billion manufacturing subsidy program. The agency, which published its criteria last week, can also be considering recruitment and training strategies, in addition to childcare advantages for employees, amongst other things. The law also provides a 25 percent tax credit for investments in the development of chip factories, that are valued at an estimated $24 billion.
The bill goals to spur domestic semiconductor chip production and reduce U.S. dependence on Asia for technology that’s used in all the things from microwave ovens to automobiles. She said the show was not a “blank check”.
“The law says these firms cannot use taxpayer money to redeem or pay dividends. We also give priority to firms that voluntarily declare that they will not buy out for five years,” Raimondo told CNBC’s Sara Eisen on Monday. “Why? Since it’s about improving research and development in America. The cash must be used to expand in America to remain ahead of innovation in the remainder of the world. Invest in R&D and your workforce, not buyouts.”
The scheme also gives priority to firms that use unionized employees or have employment contracts, which she said helps be certain that projects are delivered on time and on budget.
“We do not require a trade union, we do not require an employment contract for the project,” she said. “We prefer this because we all know from history and the undeniable fact that when you’ve gotten a contract to work on a project, chances are high it will be done on time and inside budget by America’s best-qualified workforce.”
In February, Raimondo said the US would invest CHIPS Act funds to construct at the very least two large-scale semiconductor manufacturing clusters by 2030 to make the country more competitive against leading producers resembling Taiwan.
“Right away in the US, we’re not manufacturing state-of-the-art semiconductors,” she said. “We aim to be the one country in the world where we excel in R&D, software design and state-of-the-art manufacturing and packaging on our shores. And we will achieve this goal. I haven’t any doubts about that.”
Department of Commerce began accepting applications for CHIP funding at the top of February.
— Reuters contributed to this text.