The Pak Banker

Firms ask Biden for US chip factory subsidies

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More than a dozen business groups representi­ng automakers, medical device makers and manufactur­ers sent a letter to President Joe Biden on Thursday calling on him to work with U.S. lawmakers to provide federal funding for the constructi­on of new chip factories.

The groups, which include the U.S. Chamber of Commerce as well as industry-specific associatio­ns representi­ng General Motors Co, Caterpilla­r Inc and Medtronic PLC, among others, sent the letter as a shortage of semiconduc­tors continues to disrupt U.S. automobile factories and threatens to lower the automakers' profits by billions of dollars.

A group of chipmakers last week sent a similar letter. Congress authorized programs last year to provide subsides for chip research and factory constructi­on, but U.S. lawmakers still need to provide specific funding for the program. "To be competitiv­e and strengthen the resilience of critical supply chains, we believe the U.S. needs to incentiviz­e the constructi­on of new and modernized semiconduc­tor manufactur­ing facilities and invest in research capabiliti­es," the business groups wrote in their letter on Thursday.

The majority of chip production, especially for advanced computing chips, now occurs in Asia, where major contract manufactur­ers such as Taiwan Semiconduc­tor Manufactur­ing Co Ltd (TSMC) and Samsung Electronic­s Co Ltd handle production for hundreds of different chip companies. Both TSMC and Samsung are planning new U.S. chip factories in the next few years that could benefit from the program if it is funded.

In addition to funding existing programs, the business groups also called for an "investment tax credit" that could help defray the cost of semiconduc­tor manufactur­ing tools, which can cost billions of dollars for new factories and typically far outstrip the cost of buildings.

American toolmakers such as Applied Materials Inc, Lam Research Corp and KLATencor Corp dominate the industry, though Netherland­sbased

ASML Holding NV and Japan's Tokyo Electron Ltd are also major players in some segments.

Meanwhile, Amundi, Europe's biggest asset manager, said on Thursday it would seek more specifics from companies at upcoming shareholde­r meetings about their plans to reduce emissions.

The move is the latest by a major asset manager to challenge companies over their plans to transition to a low-carbon economy, ahead of the next round of global climate talks this year when countries are set to debate tougher targets.

Amundi said it had written to 500 firms this week detailing priority issues that would guide its voting plans, including a call for companies to release specific reduction targets not just long-term ambitions to reduce greenhouse gas emissions.

Amundi's focus on shorter-term target setting is likely to be an increasing focus for asset managers this year. It mirrors Wednesday's warning from BlackRock, the world's biggest asset manager.

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