The Biden administration is accelerating negotiations on the "Chip Act" agreement with micron technology, Samsung Electronics, and other companies, in order to solidify the key achievements of its industrial policy before Trump returns to power. The aim of this legislation is to revitalize the domestic semiconductor industry in the usa, with the Department of Commerce allocating over 90% of the $39 billion appropriation, but only reaching one binding agreement. The next two months are crucial for the over 20 companies still in negotiations, with some companies close to concluding negotiations, while others including Intel, Samsung, and other companies are still examining contract details. $Intel (INTC.US)$ Other companies including Intel, Samsung, and other companies are still examining contract details.$Micron Technology (MU.US)$Other companies including Intel, Samsung, and other companies are still examining contract details.

Facing the urgency brought by Trump's victory, the Biden team hopes to complete as many transactions as possible as soon as possible to avoid renegotiating with the new government. The 'Chip Act' not only involves appropriations but also provides billions of dollars in loans and 25% tax credits, attracting commitments from companies to invest about $400 billion in the USA.

Last month, Trump expressed strong dissatisfaction with the Act, calling it 'too bad,' and hinted that tariffs might be a better response strategy. Subsequently, Republican House Speaker Mike Johnson indicated that the Republican Party plans to 'trim down' the Act, while retracting previous statements about possibly revoking the Act. Despite criticism from Trump and his allies, the industry generally believes that the Act will remain essentially unchanged.

Both parties consider domestic semiconductor production as a top priority for national security, and chips, as the lifeblood of the modern economy, are a fundamental component of various consumer and military technologies. The 'Chip Act' has received widespread support, but the Republican Party may attempt to remove content considered social priority, such as requirements for child care facilities or environmental expectations.

A Republican aide revealed that with the Republicans gaining a majority in the Senate and the outcome of the control of the House of Representatives yet to be determined, Republican staff on Capitol Hill have begun actively discussing plans for implementing reforms in the budget coordination process next year, which will be their top priority after controlling both chambers of Congress.

According to reports, the Republican Speaker of the House, Johnson, attaches special importance to reducing the burden of environmental regulations, aiming to surpass existing exemptions. At the same time, it is reported by informed sources that as Congress prepares for next year's crucial tax negotiations, lobbying groups within the industry are planning to further expand tax relief policies.

Businesses are concerned that Republican reforms may further delay the allocation of funds, despite some projects meeting initial benchmarks, indicating that the first installment of funds can be disbursed after contract signing. Informed sources state that Intel's negotiations are affected by change of control provisions, while Micron refuses to join the newly established National Semiconductor Technology Center, a $5 billion chip act research and development plan. Membership eligibility is a preliminary condition, and the company is one of the few currently rejecting these conditions. After Samsung Electronics' financial report disappointed the Biden administration, negotiations with the government also slowed temporarily, but according to the latest news, these negotiations have resumed. Informed sources reveal that this fall, due diligence meetings between the companies and government officials were once interrupted for over a month.

Samsung did not respond to requests for comment. The US Department of Commerce declined to comment on the ongoing negotiations.

Other unresolved issues include the Davis-Bacon Act's labor provisions, which establish prevailing wage standards for federally funded construction projects. Companies are also seeking clarification on the scope of their commercial activities with China. Despite the Biden administration implementing national security measures last year, restricting the ability of Semiconductor Act beneficiaries to expand facilities in Asian countries, specific details still need further clarification in contracts.

The goal of the Biden administration is to promise as much fund allocation as possible before the end of this term, which typically protects businesses from policy changes unless Congress takes action or fund recipients violate regulations.

Although Trump's Department of Commerce may consider terminating and renegotiating signed federal contracts, his team has not yet shown intent to do so. However, Biden administration officials are aware that the final stages of work, including the actual disbursement of most funds, may be left for officials appointed by Trump to complete.

A spokesperson for the US Department of Commerce stated in a declaration: "Our team will continue to implement this bipartisan law in accordance with the law," and added that the agency "will issue more announcements in the coming weeks."

In conclusion, the Biden administration is actively negotiating the Semiconductor Act agreement with major chip manufacturers to consolidate its industrial policy achievements before the Trump administration returns to power. Faced with pressing time and potential Republican reforms, the government is striving to ensure that funds are allocated promptly while addressing various issues in the negotiations.

Editor/Rocky