U.S. Commerce Secretary Gina Raimondo speaks before the House Science, Space, and Technology Committee titled “Chip on the Desk: A Year on CHIPS and the Science Act” at the Rayburn Building in Washington, D.C., on September 19 Testify at the review hearing. 2023.
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WASHINGTON — A group of Democrats has raised concerns about whether companies that receive federal semiconductor funding use the money to support stock buybacks and criticized how their own party awards the awards.
In a letter to Commerce Secretary Gina Raimondo obtained by CNBC, four lawmakers noted BAE Systems During the same period, the company began a buyback round and will receive a $35 million grant from the CHIPS Act.
The letter was led by Massachusetts Sen. Elizabeth Warren and signed by Reps. Sean Casten and Bill Foster of Illinois and Pramila Jayapal of Washington. Intel, The company received its largest award to date – $8.5 billion – and received board approval to repurchase $7.24 billion worth of stock.
Intel CEO Pat Gelsinger told Yahoo Finance last year that the company still “Committed to Dividends.”
Raimondo said the CHIPS funds are not intended to boost the company’s profits or support stock buybacks.
But lawmakers urged her to go further and ban stock buybacks by companies that receive CHIPS funds.
The lawmakers wrote in the letter that the department continues to “leave the door open for these large semiconductor companies to receive millions or even billions in CHIPS grants, move some funds, and then engage in more stock buybacks.”
“It is difficult to reconcile the history and stated intent of CHIPS awardees with buybacks and the Department’s representation that it will favor manufacturers who genuinely commit not to participate in buybacks,” the lawmakers wrote in the letter.
The CHIPS Act has allocated about $33 billion in funding, mostly to large companies. According to a statement from the department, the award is still in its preliminary stages and the company is still undergoing due diligence.
This isn’t the first time Warren has sounded the alarm about buybacks by companies that receive incentives.
she Write to BAE Systems Earlier this year, the company responded that every dollar in the grant would go to its microelectronics center. It also said the buyback decision was independent of any funds released through the CHIPS Act.
BAE Systems, Intel and the Commerce Department did not immediately respond to CNBC’s request for comment on the letter.
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