"To Receive Semiconductor Subsidies, Build a Daycare Center" US to Announce Detailed Conditions Soon

Application for Semiconductor Support Act Subsidies Begins on the 28th
U.S. Department of Commerce to Announce Detailed Conditions Soon

The U.S. administration under Joe Biden is expected to require semiconductor subsidy recipients to meet certain financial conditions, such as providing childcare facilities and refraining from share buybacks, the New York Times (NYT) reported on the 27th (local time). The U.S. government emphasized that it "does not want to spend a single dollar more than necessary" and plans to disclose various detailed requirements that companies must comply with as it begins accepting subsidy applications on the 28th.

U.S. President Joe Biden is delivering a speech at the equipment installation ceremony of Taiwan's TSMC factory in Phoenix, Arizona, last December. [Image source=AP Yonhap News]

◆ Solving Childcare Shortages with the Semiconductor Support Act?..."Build Childcare Centers"

According to reports, the U.S. Department of Commerce will announce on the 28th, as it begins accepting applications for $39 billion (about 51.5 trillion KRW) in subsidies for semiconductor production facility construction, that a basic condition will be to provide affordable and high-quality childcare services to workers who build or operate the factories.

Companies are expected to be able to use the government subsidies they receive in consultation with the Department of Commerce to build childcare facilities. This includes options such as directly establishing company childcare centers near construction sites or new factories, paying funds to local childcare facilities to send workers' children there, or providing childcare support payments to workers. According to the NYT, this requires spending more than $150 million.

This measure is intended as a way to address the severe childcare shortage in the U.S. while also alleviating the high childcare costs in some areas where semiconductor factories are being established. Given the need to secure factory workers to promote manufacturing, many workers choose childcare over commuting due to the burden of childcare costs, highlighting the necessity to resolve this issue.

Micron's new factory construction site in Boise, Idaho, USA [Image source=AP Yonhap News]

In particular, in some regions where semiconductor companies have decided to invest, the childcare shortage is more severe than the national average. For example, in Syracuse, New York, where U.S. semiconductor company Micron announced a $10 billion investment, the Department of Commerce found that demand for childcare facilities is three times greater than the actual capacity. In Phoenix, Arizona, where Taiwan's TSMC is building a new factory, workers in construction and manufacturing spend about 18% of their wages on childcare, exceeding the national average, the NYT reported.

The Biden administration initially proposed legislation related to childcare to address this severe shortage but was blocked in Congress. In this situation, it appears they are trying to indirectly support childcare funding through the Semiconductor Support Act.

Gina Raimondo, U.S. Secretary of Commerce, linked the NYT article on her Twitter and stated, "The Semiconductor Support Act cannot succeed unless we secure more labor, and securing labor is impossible without affordable childcare services. That is why we ask companies receiving subsidies how they plan to provide affordable childcare services for their workers."

◆ "Subsidies Should Not Be Misused... Share Profits and Refrain from Share Buybacks"

The Biden administration plans to require semiconductor companies receiving subsidies to comply with financial conditions to prevent misuse of funds for unintended beneficiaries. First, a clause is expected to be included that requires sharing some profits with the government if unexpected gains occur. The Department of Commerce explained to the NYT that this clause is to prevent companies from inflating losses to receive more subsidies by requiring as accurate profit forecasts as possible when applying for government subsidies.

[Image source=Reuters Yonhap News]

At the same time, the Department of Commerce is expected to provide more subsidies to companies that pledge to refrain from share buybacks. Since share buybacks can benefit shareholders, including corporate executives, this could turn subsidies intended to foster the semiconductor industry into funds that enrich shareholders. Therefore, companies receiving government support are asked to avoid share buybacks during the subsidy period. The Semiconductor Support Act prohibits using subsidies to directly repurchase shares or pay dividends.

Secretary Raimondo emphasized in an interview with the NYT that these financial requirements will only be imposed when companies truly need the subsidies and will prevent taxpayers' money from being diverted to shareholders' funds. She added, "We want to ensure that not a single dollar is spent beyond what is necessary for this project."

Additionally, the NYT reported that companies and universities receiving subsidies under the Semiconductor Support Act must make efforts to train American workers not only in advanced sciences but also in practical skills such as welding.

This content was produced with the assistance of AI translation services.