Elizabeth Warren demands stock buyback limits on semiconductor makers getting CHIPS Act funds
Christopher Hutton
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Sen. Elizabeth Warren (D-MA) and a group of other Democratic lawmakers are calling for new rules to stop corporations from using funding provided by last year’s major bipartisan semiconductor manufacturing subsidies bill to engage in stock buybacks rather than the build-out of factories as Congress hoped.
The Democrats asked Michael Schmidt, the Commerce Department official overseeing the Biden administration’s efforts, to implement rules that would prevent companies from using the funding for buybacks. The funding comes from the CHIPS Act, a bill passed last year providing more than $52 billion in subsidies for companies to build domestic semiconductor manufacturing.
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“Secretary Raimondo assured the public that the Department of Commerce intends to be vigilant and aggressive in protecting taxpayers’ and that it would ‘look after every nickel of taxpayer money,'” the lawmakers wrote in a letter to Schmidt. “Meeting this commitment and realizing the economic and national security objectives of the CHIPS Act will require the Department to use its authority to ensure that CHIPS funds are not used to subsidize stock buybacks and shareholder distributions, whether directly or indirectly.”
Warren called for Schmidt to implement provisions that would stop companies from using CHIPS funding to buy back stocks and to restrict the companies from doing so for the next 10 years.
Warren’s letter was also signed by Sens. Tammy Baldwin (D-WI), Bernie Sanders (I-VT), and Ed Markey (D-MA), along with Reps. Sean Casten (D-IL), Bill Foster (D-IL), Pramila Jayapal (D-WA), and Jamaal Bowman (D-NY).
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The letter was sent due to several of the recipients of the CHIPS Act funding engaging in stock buybacks. The semiconductor manufacturers Intel, IBM, Qualcomm, Texas Instruments, and Broadcom collectively spent $250 billion on stock buybacks between 2011 and 2020.
Warren has been a regular critic of buybacks, calling for the Commerce Department to restrict the practice in order to avoid providing excess corporate subsidies. The Massachusetts Democrat described the practice as “nothing but paper manipulation” in a March 2021 interview.