USC - Semiconductor incentives

View all text of Chapter 72 A [§ 4651 - § 4659]

§ 4652. Semiconductor incentives

(a) Financial assistance program

(1) In general

(2) Procedure

(A) In general

(B) EligibilityIn order for a covered entity to qualify for financial assistance under this section, the covered entity shall demonstrate to the Secretary, in the application submitted by the covered entity under subparagraph (A), that—

(i) the covered entity has a documented interest in constructing, expanding, or modernizing a facility described in paragraph (1) 1

1 So in original. Probably should be followed by a semicolon.

(ii) with respect to the project described in clause (i), the covered entity has—(I) been offered a covered incentive;(II) made commitments to worker and community investment, including through—(aa) training and education benefits paid by the covered entity; and(bb) programs to expand employment opportunity for economically disadvantaged individuals; and(III) secured commitments from regional educational and training entities and institutions of higher education to provide workforce training, including programming for training and job placement of economically disadvantaged individuals;(IV) an executable plan to sustain the facility described in clause (i) without additional Federal financial assistance under this subsection for facility support;(V) determined—(aa) the type of semiconductor technology, equipment, materials, or research and development the covered entity will produce at the facility described in clause (i); and(bb) the customers, or categories of customers, to which the covered entity plans to sell the semiconductor technology, equipment, materials, or research and development described in item (aa); and(VI) documented, to the extent practicable, workforce needs and developed a strategy to meet such workforce needs consistent with the commitments described in subclauses (II) and (III);

(iii) with respect to the project described in clause (i), the covered entity has an executable plan to identify and mitigate relevant semiconductor supply chain security risks, such as risks associated with access, availability, confidentiality, integrity, and a lack of geographic diversification in the covered entity’s supply chain; and

(iv) with respect to any project for the production, assembly, or packaging of semiconductors, the covered entity has implemented policies and procedures to combat cloning, counterfeiting, and relabeling of semiconductors, as applicable.

(C) Considerations for reviewWith respect to the review by the Secretary of an application submitted by a covered entity under subparagraph (A)—

(i) the Secretary may not approve the application unless the Secretary—(I) confirms that the covered entity has satisfied the eligibility criteria under subparagraph (B);(II) determines that the project to which the application relates is in the economic and national security interests of the United States; and(III) has notified the appropriate committees of Congress not later than 15 days before making any commitment to provide a grant to any covered entity that exceeds $10,000,000;

(ii) the Secretary may consider whether—(I) the covered entity has previously received financial assistance made under this subsection;(II) the governmental entity offering the applicable covered incentive has benefitted from financial assistance previously provided under this subsection;(III) the covered entity has demonstrated that they are responsive to the national security needs or requirements established by the Intelligence Community (or an agency thereof), the National Nuclear Security Administration, or the Department of Defense; and(IV) when practicable, a consortium that is considered a covered entity includes a small business concern, as defined under section 632 of this title, notwithstanding section 121.103 of title 13, Code of Federal Regulations;

(iii) the Secretary shall consider the type of semiconductor technology produced by the covered entity and whether that semiconductor technology advances the economic and national security interests of the United States;

(iv) the Secretary may not approve an application, unless the covered entity provides a plan that does not use Federal financial assistance to assist efforts to physically relocate existing facility infrastructure to another jurisdiction within the United States, unless the project is in the interest of the United States; and

(v) the Secretary may not approve an application if the Secretary determines that the covered entity is a foreign entity of concern.

(D) PriorityIn awarding Federal financial assistance to covered entities under this subsection, the Secretary shall—

(i) give priority to ensuring that a covered entity receiving financial assistance will—(I) manufacture semiconductors necessary to address gaps and vulnerabilities in the domestic supply chain across a diverse range of technology and process nodes; and(II) provide a secure supply of semiconductors necessary for the national security, manufacturing, critical infrastructure, and technology leadership of the United States and other essential elements of the economy of the United States; and

(ii) ensure that the assistance is awarded to covered entities for both advanced and mature technology nodes to meet the priorities described in clause (i).

(E) Records

(3) Amount

(A) In general

(B) Larger investmentFederal investment in any individual project shall not exceed $3,000,000,000 unless the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence, recommends to the President, and the President certifies and reports to the appropriate committees of Congress, that a larger investment is necessary to—

(i) significantly increase the proportion of reliable domestic supply of semiconductors relevant for national security and economic competitiveness that can be met through domestic production; and

(ii) meet the needs of national security.

(4) Use of fundsA covered entity that receives a financial assistance award under this subsection may only use the financial assistance award amounts to—

(A) finance the construction, expansion, or modernization of a facility or equipment to be used for the purposes described in paragraph (1), as documented in the application submitted by the covered entity under paragraph (2)(B), as determined necessary by the Secretary for purposes relating to the national security and economic competitiveness of the United States;

(B) support workforce development for a facility described in subparagraph (A);

(D) pay reasonable costs related to the operating expenses for a facility described in subparagraph (A), including specialized workforce, essential materials, and complex equipment maintenance, as determined by the Secretary.

(5) Clawback

(A) Target datesFor all awards to covered entities, the Secretary shall—

(i) determine target dates by which a project shall commence and complete; and

(ii) set these dates by the time of award.

(B) Progressive recovery for delays

(C) Technology clawbackThe Secretary shall recover the full amount of an award provided to a covered entity under this subsection if, during the applicable term with respect to the award, the covered entity knowingly engages in any joint research or technology licensing effort—

(i) with a foreign entity of concern; and

(ii) that relates to a technology or product that raises national security concerns, as determined by the Secretary and communicated to the covered entity before engaging in such joint research or technology licensing.

(D) WaiverIn the case of delayed projects, the Secretary may waive elements of the clawback provisions incorporated in each award after—

(i) making a formal determination that circumstances beyond the ability of the covered entity to foresee or control are responsible for delays; and

(ii) submitting congressional notification.

(E) Congressional notificationThe Secretary shall notify appropriate committees of Congress—

(i) of the clawback provisions attending each such award; and

(ii) of any waivers provided, not later than 15 days after the date on which such a waiver was provided.

(6) Expansion clawback

(A) Definition of legacy semiconductor

(i) In generalIn this paragraph, the term “legacy semiconductor”—(I) includes—(aa) a semiconductor technology that is of the 28 nanometer generation or older for logic;(bb) with respect to memory technology, analog technology, packaging technology, and any other relevant technology, any legacy generation of semiconductor technology relative to the generation described in item (aa), as determined by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence; and(cc) any additional semiconductor technology identified by the Secretary in a public notice issued under clause (ii); and(II) does not include a semiconductor that is critical to national security, as determined by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence.

(ii) Updates

(iii) Functions of the Secretary

(iv) Consultation

(v) ConsiderationsIn carrying out clause (ii), the Secretary shall consider—(I) state-of-the-art semiconductor technologies in the United States and internationally, including in foreign countries of concern; and(II) consistency with export controls relating to semiconductors.

(B) Definition of semiconductor manufacturingIn this paragraph, the term “semiconductor manufacturing”—

(i) has the meaning given the term by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence; and

(ii) includes front-end semiconductor fabrication.

(i) In general

(ii) ExceptionsThe prohibition in the agreement required under clause (i) shall not apply to—(I) existing facilities or equipment of a covered entity for manufacturing legacy semiconductors; or(II) significant transactions involving the material expansion of semiconductor manufacturing capacity that—(aa) produces legacy semiconductors; and(bb) predominately serves the market of a foreign country of concern.

(iii) Affiliated group

(D) Notification requirements

(E) Violation of agreement

(i) Notification to covered entitiesNot later than 90 days after the date of receipt of a notification described in subparagraph (D) from a covered entity, the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence, shall—(I) determine whether the significant transaction described in the notification would be a violation of the agreement of the covered entity required under subparagraph (C)(i); and(II) notify the covered entity of the Secretary’s decision under subclause (I).

(ii) Opportunity to remedyUpon a notification under clause (i)(II) that a planned significant transaction of a covered entity is a violation of the agreement of the covered entity required under subparagraph (C)(i), the Secretary shall—(I) immediately request from the covered entity tangible proof that the planned significant transaction has ceased or been abandoned; and(II) provide the covered entity 45 days to produce and provide to the Secretary the tangible proof described in subclause (I).

(iii) Failure by the covered entity to cease or remedy the activity

(iv) MitigationIf the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence, determines that a covered entity planning a significant transaction that would violate the agreement required under subparagraph (C)(i) could take measures in connection with the transaction to mitigate any risk to national security, the Secretary—(I) may negotiate, enter into, and enforce any agreement or condition for the mitigation; and,(II) waive the recovery requirement under clause (iii).

(F) Submission of records

(i) In general

(ii) Eligibility

(G) Confidentiality of records

(i) In generalSubject to clause (ii), any information derived from records or necessary information disclosed by a covered entity to the Secretary under this section—(I) shall be exempt from disclosure under section 552(b)(3) of title 5; and(II) shall not be made public.

(ii) ExceptionsClause (i) shall not prevent the disclosure of any of the following by the Secretary:(I) Information relevant to any administrative or judicial action or proceeding.(II) Information that a covered entity has consented to be disclosed to third parties.(III) Information necessary to fulfill the requirement of the congressional notification under subparagraph (H).

(H) Congressional notificationNot later than 60 days after the date on which the Secretary finds a violation by a covered entity of an agreement required under subparagraph (C)(i), and after providing the covered entity with an opportunity to provide information in response to that finding, the Secretary shall provide to the appropriate Committees of Congress—

(i) a notification of the violation;

(ii) a brief description of how the Secretary determined the covered entity to be in violation; and

(iii) a summary of any actions or planned actions by the Secretary in response to the violation.

(I) Regulations

(b) Coordination required

(1) not later than 2 years after the date of disbursement of the first financial award under subsection (a), and biennially thereafter for 10 years, conduct a review of the program established under subsection (a), which shall include, at a minimum—

(A) a determination of the number of instances in which financial assistance awards were provided under that subsection during the period covered by the review;

(B) an evaluation of how—

(i) the program is being carried out, including how recipients of financial assistance awards are being selected under the program;

(ii) other Federal programs are leveraged for manufacturing, research, and training to complement the financial assistance awards awarded under the program; and

(iii) the Federal Government could take specific actions to address shortages in the semiconductor supply chain, including—(I) demand-side incentives, including incentives related to the information and communications technology supply chain; and(II) additional incentives, at national and global scales, to accelerate utilization of leading-edge semiconductor nodes to address shortages in mature semiconductor nodes; and

(i) facilities described in subsection (a)(1) that were constructed, expanded, or modernized as a result of awards made under the program;

(ii) research and development carried out with awards made under the program;

(iii) workforce training programs carried out with awards made under the program, including efforts to hire individuals from disadvantaged populations; and

(iv) the impact of projects on the United States share of global microelectronics production;

(v) how projects are supporting the semiconductor needs of critical infrastructure industries in the United States, including those industries designated by the Cybersecurity and Infrastructure Security Agency as essential infrastructure industries; and

(D) drawing on data made available by the Department of Labor or other sources, to the extent practicable, an analysis of—

(i) semiconductor industry data regarding businesses that are—(I) majority owned and controlled by minority individuals;(II) majority owned and controlled by women; or(III) majority owned and controlled by both women and minority individuals;

(ii) the number and amount of contracts and subcontracts awarded by each covered entity using funds made available under subsection (a) disaggregated by recipients of each such contract or subcontracts that are majority owned and controlled by minority individuals and majority owned and controlled by women; and

(iii) aggregated workforce data, including data by race or ethnicity, sex, and job categories.2

2 So in original. The period probably should be “; and”.

(2) submit to the appropriate committees of Congress the results of each review conducted under paragraph (1).

(d) Sense of CongressIt is the sense of Congress that, in carrying out subsection (a), the Secretary should allocate funds in a manner that—

(1) strengthens the security and resilience of the semiconductor supply chain, including by mitigating gaps and vulnerabilities;

(2) provides a supply of secure semiconductors relevant for national security;

(3) strengthens the leadership of the United States in semiconductor technology;

(4) grows the economy of the United States and supports job creation in the United States;

(5) bolsters the semiconductor and skilled technical workforces in the United States;

(6) promotes the inclusion of economically disadvantaged individuals and small businesses; and

(7) improves the resiliency of the semiconductor supply chains of critical manufacturing industries.

(e) Additional assistance for mature technology nodes

(1) In general

(2) Eligibility and requirementsIn order for an entity to qualify to receive Federal financial assistance under this subsection, the covered entity shall agree to—

(A) submit an application under subsection (a)(2)(A);

(B) meet the eligibility requirements under subsection (a)(2)(B);

(C)

(i) provide equipment or materials for the fabrication, assembly, testing, or packaging of semiconductors at mature technology nodes in the United States; or

(ii) fabricate, assemble using packaging, or test semiconductors at mature technology nodes in the United States;

(D) commit to using any Federal financial assistance received under this section to increase the production of semiconductors at mature technology nodes; and

(E) be subject to the considerations described in subsection (a)(2)(C).

(3) Procedures

(4) Considerations

(5) Priority

(6) Authorization of appropriations

(f) Construction projects

(g) Loans and loan guarantees

(1) In general

(2) ConditionsThe Secretary may select eligible projects to receive loans or loan guarantees under this subsection if the Secretary determines that—

(A) the covered entity—

(i) has a reasonable prospect of repaying the principal and interest on the loan; and

(ii) has met such other criteria as may be established and published by the Secretary; and

(B) the amount of the loan (when combined with amounts available to the loan recipient from other sources) will be sufficient to carry out the project.

(3) Reasonable prospect of repaymentThe Secretary shall base a determination of whether there is a reasonable prospect of repayment of the principal and interest on a loan under paragraph (2)(A)(i) on a comprehensive evaluation of whether the covered entity has a reasonable prospect of repaying the principal and interest, including, as applicable, an evaluation of—

(A) the strength of the contractual terms of the project the covered entity plans to perform (if commercially reasonably available);

(B) the forecast of noncontractual cash flows supported by market projections from reputable sources, as determined by the Secretary;

(D) the projected financial strength of the covered entity—

(i) at the time of loan close; and

(ii) throughout the loan term after the project is completed;

(E) the financial strength of the investors and strategic partners of the covered entity, if applicable;

(F) other financial metrics and analyses that the private lending community and nationally recognized credit rating agencies rely on, as determined appropriate by the Secretary; and

(G) such other criteria the Secretary may determine relevant.

(4) Rates, terms, and repayments of loansA loan provided under this subsection—

(A) shall have an interest rate that does not exceed a level that the Secretary determines appropriate, taking into account, as of the date on which the loan is made, the cost of funds to the Department of the Treasury for obligations of comparable maturity; and

(B) shall have a term of not more than 25 years.

(5) Additional terms

(6) Responsible lenderNo loan may be guaranteed under this subsection, unless the Secretary determines that—

(A) the lender is responsible; and

(B) adequate provision is made for servicing the loan on reasonable terms and protecting the financial interest of the United States.

(7) Advanced budget authority

(8) Continued oversight

(h) Authority relating to environmental review

(1) In generalNotwithstanding any other provision of law, the provision by the Secretary of Federal financial assistance for a project described in this section that satisfies the requirements under subsection (a)(2)(C)(i) of this section shall not be considered to be a major Federal action under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) (referred to in this subsection as “NEPA”) or an undertaking for the purposes of division A of subtitle III of title 54 if—

(A) the activity described in the application for that project has commenced not later than December 31, 2024;

(B) the Federal financial assistance provided is in the form of a loan or loan guarantee; or

(C) the Federal financial assistance provided, excluding any loan or loan guarantee, comprises not more than 10 percent of the total estimated cost of the project.

(2) Savings clause

(i) OversightNot later than 4 years after disbursement of the first financial award under subsection (a), the Inspector General of the Department of Commerce shall audit the program under this section to assess—

(1) whether the eligibility requirements for covered entities receiving financial assistance under the program are met;

(2) whether eligible entities use the financial assistance received under the program in accordance with the requirements of this section;

(3) whether the covered entities receiving financial assistance under this program have carried out the commitments made to worker and community investment under subsection (a)(2)(B)(ii)(II) by the target date for completion set by the Secretary under subsection (a)(5)(A);

(4) whether the required agreement entered into by covered entities and the Secretary under subsection (a)(6)(C)(i), including the notification process, has been carried out to provide covered entities sufficient guidance about a violation of the required agreement;

(5) whether the Secretary has provided timely Congressional notification about violations of the required agreement under subsection (a)(6)(C)(i), including the required information on how the Secretary reached a determination of whether a covered entity was in violation under subsection (a)(6)(E); and

(6) whether the Secretary has sufficiently reviewed any covered entity engaging in a listed exception under subsection (a)(6)(C)(ii).

(j) Prohibition on use of funds

(Pub. L. 116–283, div. H, title XCIX, § 9902, Jan. 1, 2021, 134 Stat. 4846; Pub. L. 117–167, div. A, §§ 103(b), 105(a), Aug. 9, 2022, 136 Stat. 1380, 1391; Pub. L. 118–105, § 2(1), Oct. 2, 2024, 138 Stat. 1587.)