BY: BRENDAN BORDELON, CAITLIN OPRYSKO | 03/12/2023 03:00 PM EST
Washington is ready to unleash an unprecedented $52 billion to support the domestic microchip industry — and a startling array of companies are angling for a payday, some with an unclear connection to microchips.
Among them are labor unions, the social media company Snap, FedEx, home heating and cooling companies, cryptocurrency exchange Coinbase and even the American Israel Public Affairs Committee, according to lobbying filings from the last three months of 2022.
The CHIPS and Science Act, passed with bipartisan support and signed into law by President Joe Biden last August, is designed to entice chip manufacturers back to the U.S. after decades of losing market share to Asia. And the bulk of the money is expected to go to established semiconductor giants like Intel and Samsung, which plan to build huge new fabrication plants with some financial help from Uncle Sam.
But the new law has also attracted an armada of lobbyists repping a wide range of industries. Some may be making long-shot bids — lobbyists for Snap, for example, plan to ask Washington to subsidize plans to build chips for its augmented reality glasses. And filing a lobbying disclosure doesn’t necessarily mean a company will ask for money.
Still, the flood of filings illustrates the corporate free-for-all that ensues when Washington opens its checkbook — particularly early in the game, when just a few dollars in lobbying fees could reap serious rewards down the line.
“This is a low-risk, high-reward maneuver,” said Scott Lincicome, director of general economics at the libertarian Cato Institute. “It would almost be corporate malpractice to not go after that cash.”
Lincicome pointed to the broad array of organizations that can apply for the money under the CHIPS and Science Act — “literally anyone or anything that touches a semiconductor in some way is eligible,” he said.
Josh Teitelbaum, a lobbyist at Akin Gump Strauss Hauer & Feld, said the lobbying frenzy is only natural: the ecosystem around the U.S. chip industry, he said, “is much broader than just the small handful of companies that do the actual fabrication.”
Teitelbaum is lobbying for CHIPS and Science dollars on behalf of Snap, which develops and manufactures glasses containing AR tech in addition to operating Snapchat, the popular social media app. According to Snap spokesperson Peter Boogard, the company wants to convince the Commerce Department to send subsidies so it can build stateside the “leading-edge semiconductor processing components” used in its AR products.
Teitelbaum suggested Snap isn’t the only unexpected company angling for a piece of CHIPS and Science money. “You could see some companies and industries weighing in that you might not necessarily expect to be there,” Teitelbaum said. “But all that is just an indication of how embedded chips are in our everyday lives.”
On top of the tens of billions in direct subsidies, the CHIPS and Science Act also earmarks roughly $200 billion in eventual funding for federal research agencies like the National Science Foundation. That money is another big draw for lobbyists — the vast majority still needs to be appropriated by Congress, and Lincicome said there is “probably going to be a lot of folks lobbying to ensure that the actual appropriation occurs.”
That’s true for the XR Association, a group representing the augmented and virtual reality industries which mounted a successful campaign to make “immersive technology” eligible for R&D funding under CHIPS and Science. The XR Association continued to lobby on the law in the final months of 2022 — and Miranda Lutz, the group’s director of public policy, said it’s now pressuring Capitol Hill to pour money into those programs.
“We’d obviously like to see full funding for NSF, [the National Institute of Standards and Technology] and some of the other agencies that would have oversight over money that could potentially flow into XR R&D,” Lutz said.
The big players
While Snap and the XR Association are open about their CHIPS and Science plans, that’s not the case for most organizations lobbying on the law.
The split funding opportunities — tens of billions of dollars in microchip subsidies along with hundreds of billions of dollars in science agency authorizations — not only give lobbyists two distinct funding flows to track. They also make it easier for companies lobbying on the law to conceal whether they’re more interested in direct subsidies or the benefits brought by boosted R&D budgets.
Despite their divergent business models, the five top U.S. tech companies — Meta, Microsoft, Google, Amazon and Apple — all lobbied on CHIPS and Science implementation in the last three months of 2022.
Of the five, Meta was the only one that explicitly said it does not “have any plans to” ask Commerce for microchip subsidies. Meta spokesperson Andy Stone said the company paid lobbyists to help it understand “the effect of the legislation on our device manufacturing.”
Kate Frischmann, a spokesperson for Microsoft — which paid two separate lobbying firms to work on CHIPS — said the company is merely “monitoring” its implementation (the law appropriated $1.5 billion for next-gen wireless tech, which is mentioned in one of Microsoft’s filings). Google spokesperson José Castañeda said the company backed CHIPS and Science ahead of its passage last summer, but declined to explain Google’s subsequent interest in the law’s implementation.
Spokespeople for Amazon and Amazon Web Services — both lobbied on CHIPS implementation in the final months of 2022 — declined to comment on the company’s strategy (Amazon’s filing mentions “issues related to STEM education, computer science education, and job training”). Apple spokespeople did not reply to multiple requests for comment on its interest in CHIPS implementation, but the company’s Q4 filing mentions “issues related to the domestic manufacturing of semiconductors” as well as “information related to Apple’s supply chain.”
Other big tech companies, including software firm Salesforce and networking giant Cisco Systems, lobbied Washington on CHIPS and Science at the end of last year. Salesforce spokesperson Allen Tsai said the company is focused on the law’s infrastructure, supply chain and workforce provisions. He also said Salesforce has “no plans to apply for the law’s subsidies.” A spokesperson for Cisco did not respond to multiple requests for comment.
Big tech represents just a small slice of the companies and organizations who lobbied on CHIPS and Science’s implementation. Top defense contractors like Northrop Grumman and General Dynamics paid lobbyists to work on the law. So did HVAC companies like Carrier and Trane (chipmaking requires advanced filtration technology and climate-control systems, which could explain their interest).
The law’s implementation is a potential bonanza for a wide range of materials suppliers, including coal companies like CONSOL Energy and the American Coatings Association, which represents the paint and coatings industry. “When thinking about computer chip manufacturing, one doesn’t naturally think about massive slabs of high-grade aluminum,” reads one document submitted by aluminum supplier TST Inc. to the Commerce Department late last year. “Yet the two are inextricably connected.”
Massive labor unions, including the AFL-CIO and the Communications Workers of America, have lobbied on the law’s implementation. In a comment submitted to the Commerce Department last November, the International Association of Sheet Metal, Air, Rail and Transportation Workers urged the administration to incorporate “strong labor standards” into the financial assistance given to companies.
In an apparent win for the unions, late last month the Commerce Department said it would prioritize construction projects that use project labor agreements.
A bevy of local government agencies and regional development groups, from the Los Angeles County Metropolitan Transportation Authority to the Greater Pittsburgh Chamber of Commerce and the Port of Portland, all lobbied on CHIPS and Science implementation. So did some national governments — the Republic of Korea warned the Commerce Department late last year not to discriminate between U.S. and foreign-owned companies when distributing funds.
Top telecom firms like Dish Network and Lumen Technologies — likely attracted by the law’s support for advanced wireless tech — have weighed in. So have major health care companies like Baxter Healthcare, as well as biotech firms like Illumina and Novozymes.
Car companies were hit hard by the microchip shortage that began in the early months of the pandemic. Last Congress, they successfully lobbied for CHIPS and Science to include $2 billion in subsidies for the production of less-advanced “legacy” chips frequently found in automobiles. And disclosures show they were still at it after the bill’s passage — Ford, General Motors, Toyota, Nissan, Hyundai and Honda all lobbied on the law in the last quarter of 2022.
Then there are the universities. Higher ed has a huge financial stake in the CHIPS and Science Act, particularly when it comes to the hundreds of billions of dollars it authorizes for federal research agencies. From the University of California to MIT, Ohio State University, the University of Central Florida, Harvard, the State University of New York and (many) more, universities from across the country lobbied on the law’s implementation.
Even the crypto industry has gotten in on the action. Coinbase, the company behind one of the largest cryptocurrency exchanges, was among those lobbying on the law’s implementation at the end of last year. A Coinbase spokesperson said the company is most interested in a provision that requires the White House Office of Science and Technology Policy to hire a cryptocurrency specialist, as well as one that directs the NSF to boost research into “distributed ledger technologies.”
There are also groups whose lobbying on CHIPS and Science defies easy explanation. AIPAC is chief among them — although filings show that Washington’s premier pro-Israel group lobbied on CHIPS and Science implementation late last year, the group did not respond to repeated requests for comment. Shipping giant FedEx, which lobbied on CHIPS and Science in the same time frame, also did not respond to multiple questions regarding its interest in the law.
A spokesperson for Audible, an online audiobook and podcast service owned by Amazon, said their Q4 lobbying on CHIPS and Science was done to ensure that the law’s discretionary spending “includes place-based criteria and funding for financing that can be directed to high growth startups interested in joining Newark’s innovation corridor” (Audible is headquartered in Newark, New Jersey).
Some lobbyists may have even been confused about the CHIPS and Science Act’s provisions. The law includes $2.5 billion for research into “advanced packaging,” which investigates how to best combine microchips into one device for maximum processing power.
That’s different from the kind of packaging that interests the Flexible Packaging Association, which represents companies that create actual packages out of materials like paper, plastic or aluminum foil and which paid a lobbyist to advocate on the law’s implementation at the end of 2022. When asked about the apparent discrepancy, FPA president and CEO Alison Keane said that while the group’s lobbyist “[does] track the act, it is not on the CHIPS side of things.”
It remains to be seen whether the flood of lobbying activity on CHIPS and Science ends with payouts for a wider range of companies than the core microchip and R&D firms. In a call with reporters late last month on the law’s implementation, Commerce Secretary Gina Raimondo called national security “the primary lens through which we will evaluate everything.” But Snap and Teitelbaum are so far unfazed.
“Broadly speaking, you don’t necessarily need to have a national security application in order to be eligible for this funding,” Teitelbaum said. And Lincicome highlighted the stipulations the Commerce Department recently attached to the money — including new childcare and labor requirements for firms that take more than $150 million in subsidies — to suggest the administration isn’t as serious about the national security angle as it suggests.
That would be good news for companies like Snap. And as it and a clutch of other firms make their play, Lincicome said it’s “inevitable that you’re going to have a connection between lobbying dollars and final disbursement of subsidy funds.”
“This is not corruption,” Lincicome said. “It’s just simply squeaky wheel.”