No Equity, No Problem: How Top Chipmakers Are Securing Billions Without Giving Up a Stake
Government Clarifies Stance on CHIPS Act Equity for Chipmakers
Unlike Intel, the Taiwan Semiconductor Manufacturing Company (TSMC) and Micron Technology might not be compelled to relinquish ownership stakes in exchange for grants from the U.S. CHIPS Act. This shift comes after initial resistance surfaced during preliminary discussions with these leading chip manufacturers.
Initial Speculation Versus Current Policy
A recent statement from a Trump administration official to Investopedia confirmed that the administration is not pursuing equity interests in TSMC or Micron. This clarification follows earlier remarks from Commerce Secretary Howard Lutnick that had suggested the possibility of new equity agreements for federal funding.
The "Piece of the Action" Debate
Secretary Lutnick had previously stated that while the Biden administration had provided funds without equity, a new approach under a potential Trump presidency would seek a return on investment, advocating for the government to receive a share of the companies' operations in exchange for financial support.
Diverse Impacts on Industry Leaders
While such a deal might offer a critical lifeline for Intel, a company currently undertaking significant restructuring efforts, including workforce reductions and asset divestitures, other recipients of CHIPS Act funding, such as TSMC and Micron, may not find equity demands as appealing. Industry analysts from Bernstein have openly questioned whether some companies would simply decline the funding under such conditions.
TSMC's Potential Rejection of Equity Demands
Reports from The Wall Street Journal indicate that during early negotiations, TSMC executives hinted at the possibility of declining CHIPS Act funding if the U.S. government insisted on acquiring an ownership share in the company.
Companies' Silence and Market Response
Both TSMC and Micron have yet to issue official comments on these developments. In related market news, shares of both companies saw an approximate 3% increase in value, aligning with a broader market surge following remarks from Federal Reserve Chair Jerome Powell, which suggested an impending reduction in interest rates.