(C) Common Dreams
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REPORT: Maximizing the Benefits of the CHIPS Program [1]

['Avery Rhoades']

Date: 2024-07-11 09:00:19+00:00

Introduction

The 2022 CHIPS and Science Act represents a huge opportunity to both bolster domestic semiconductor production and encourage more equitable and sustainable corporate practices.

This report zeroes in on the law’s $39 billion in subsidies for semiconductor manufacturing, and specifically on the Biden administration’s decision to grant preferential treatment in the awarding of these subsidies to firms that agree to forgo all stock buybacks for five years.

The semiconductor industry has been a major exploiter of stock buybacks, a financial maneuver that artificially inflates the value of company shares (and the value of executive stock-based pay) while siphoning resources from worker wages, R&D, and other productive investments.

The Biden administration’s incentives for firms to forgo this practice send a critical message about the importance of ensuring that public investment dollars are used for their stated purpose: to benefit working families and build a stronger economy, rather than to further enrich executives and wealthy shareholders.

This report examines buybacks and executive pay at the 11 companies that had signed preliminary memoranda of terms with the Department of Commerce for CHIPS subsidies as of June 30, 2024. The subsidies for these 11 firms are worth nearly $30 billion combined. We review the actions the Biden administration has taken to rein in buyback practices so far and then recommend additional steps to put real teeth into this effort. The report underscores the need for explicit restrictions on all stock buyback spending in the final CHIPS subsidy contracts.

A summary follows, but more detail — including charts documenting our findings on all 11 companies — is available in the full PDF.

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[1] Url: https://ips-dc.org/report-maximizing-the-benefits-of-the-chips-program

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