On August 22, according to the Wall Street Journal, a U.S. government official revealed that the Trump administration is considering investing in companies that receive subsidy funds from the 2022 Chip Act, except for larger semiconductor companies that are expanding their U.S. investments.
Trump and Lutnick
U.S. Commerce Secretary Howard Lutnick confirmed in an interview with CNBC on Tuesday that the U.S. government is in talks with troubled semiconductor company Intel to take a 10% stake in it, and said the government may also consider taking stakes in other chip companies.
"The Biden administration is simply giving free money to Intel, giving free money to TSMC, and giving free money to all these companies. The Trump administration's proposition is, 'Hey, we want equity. If we provide financial support, we must obtain corresponding equity.'" Lutnick told CNBC.
The comments heightened concerns among industry executives. They worry that the U.S. government may also take stakes in large chip manufacturers such as TSMC, Micron Technology and Samsung. Just last month, the U.S. government acquired a 15% stake in a rare earth materials producer.
TSMC’s response plan
There are signs that such a move may face corporate backlash. People familiar with the matter said TSMC may return the subsidy if the U.S. government requires it to become a shareholder. TSMC executives have already held preliminary discussions on this plan.
TSMC U.S. factory
TSMC previously received up to $6.6 billion in U.S. government subsidies to build a large chip factory in Arizona. The factory will start producing advanced chips by the end of 2024.
TSMC agreed to build the plant in Arizona under pressure from the Biden administration, but the company has never relied heavily on U.S. financial support, people familiar with the matter said. TSMC declined to comment.
Exceptions for chip giants
An administration official clarified on Thursday that the U.S. government does not plan to take a stake in companies like Taiwan Semiconductor Manufacturing Co., Ltd. that are increasing U.S. investment. However, those companies that do not increase their investment commitments may need to exchange equity for government subsidies.
"The U.S. Department of Commerce has no intention of acquiring equity interests in TSMC and Micron," the official said.
Lutnick has been asking companies that receive funding from the CHIP Act to increase their overall investments in the United States, hoping to get more returns for taxpayers. The bill provides tens of billions of dollars in grants, loans and other forms of subsidies to push companies including Intel and Taiwan Semiconductor Manufacturing Co. to expand domestic semiconductor manufacturing in the United States.
This approach is the latest move by the U.S. government to reward or punish technology companies based on their investment in the United States. President Trump recently said that companies that invest more in the United States will be exempt from approximately 100% tariffs on chip imports.
But while Lutnick is considering converting some of the Chip Act grant money Intel received into equity, such an operation could face legal challenges. Under the terms of the previous agreement, the bill requires companies to split profits above a certain level with the government.