chipmakers won't be allowed to funnel CHIPS dollars into stock buyback programs
Of course not.
Income from CHIPS act = $xM
Revenue from all other sources = $xM
Stock buyback = $xM - but that all came from other sources
Intel, TSMC, Samsung, and other semiconductor foundries stand to receive billions in American taxpayer funding under the CHIPS and Science Act to expand fab capacity on US soil, according to documents released by the government's Commerce Department. Crucially, there are a few catches. While the rules [PDF] for obtaining the …
You mean, have the government funds be handed over in return for, say, shares which can then repay the funds by means of dividends from the profits made?
But, but - that means the government will end up owning the companies - that's the same as nationalising them! Gubmint taking away our companies! Commies!
You can't have the hard-workin', god-fearin' companies paying the government back, that's just what the Reds want!
But if it caps rampant greed to a manageable level, fine. We need the new fabs more for resiliency than pure profits, or they would be built someplace much cheaper than the US.
That said I am glad there will be at least a semblance of a backstop to us footing the whole bill and them keeping all the profits. And if they choose a sane price point, no perverse incentive to fail, as they can still make more money by succeeding and paying a cut than failing(hopefully).
And especially if these Fabs get used for their intended function, providing continuity of business for TSMC in the event of a invasion from China and a need to be able to fill the US markets critical semiconductor demand, the profits from those Fabs could be extensive.
>the profits from those Fabs could be extensive.
No they won't. If the return in capital was likely to be more than T-bills then the capitalists would be fighting to invest.
The reason Taiwan did this is that the returns for a small relatively poor country, and assuming you are a monopoly, were slightly better than the alternatives.
Might be worth doing as 5% of the defense budget. But even assuming half this is actually spent on fabs, it's purely a payment for strategic reasons
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