To make money, you’ve got to spend money. Chip companies have spent $100 million in lobbying expenditures over the last several years in hopes of getting 500 times that back from the federal government in the form of subsidies. That would be a healthy return on an investment.
The chip industry’s spending on lobbying has risen sharply in recent years, as lawmakers have been debating $52 billion in federal subsidies aimed at bolstering American chip production and innovation. To help convince lawmakers to set aside federal dollars for the industry, lobbying expenditures have increased roughly 50% since 2018, jumping to $46.4 million in 2021. Four years ago, chip companies spent $31.7 million in D.C., according to data from the Center for Responsive Politics.
By comparison, the internet industry — which includes tech giants Facebook, Google and Amazon — increased its spending by 18% to $90.2 million during the same period, according to the CRP data. Unlike chip companies, Big Tech has faced rapidly escalating issues in Washington prompting discussion of regulation that threatens to damage profits or break apart businesses.
The chip industry didn’t spend all of its cash lobbying for subsidies, according to disclosure forms reviewed by Protocol. Chip companies have begun to realize that they are increasingly subject to the whims of Washington as their businesses have grown and become a more prominent part of the economy, contributing to a broad swath of industries. The change in thinking has resulted in an overall increase in lobbying efforts over the past four years, including the battle for subsidies.
Some companies, such as Qualcomm and Intel, disclose each specific law their lobbyists are pushing for, while other businesses only report general topic areas such as intellectual property or trade. From the filings, it's not clear exactly how much cash the industry spent directly on lobbying for manufacturing subsidies.
But what is clear is that spending began to ramp up in 2020, reaching $37.7 million as the first subsidy bill was introduced in Congress. At that point, big chip manufacturers such as GlobalFoundries and TSMC, the latter of which had not previously spent money on lobbyists in the U.S., ramped up their efforts. GlobalFoundries has announced factory expansion plans in Malta, New York, and increased its lobbying outlays to $1.7 million in 2021 from $1.4 million in 2020. GlobalFoundries did not respond to a request for comment.
Taiwan’s TSMC spent $2.2 million on lobbying in 2021, up from $2 million the year earlier — the first lobbying outlay from TSMC since 1998, according to CRP data. Disclosure forms from TSMC say the company hired lobbyists to push for versions of the subsidies program and tax-related issues.
TSMC has announced plans to build a $12 billion factory, or fab, in Arizona. Construction began last year and the new site is expected to begin production in two to three years. TSMC did not return a request for comment.
But many smaller amounts of new lobbying dollars also made a significant contribution to the sharp rise in lobbying expenditures. Chip factory tool-maker KLA spent roughly $700,000 in 2021, and about $500,000 the year before, when its recent lobbying outlays were less than $200,000; ASML, which is based in the Netherlands and declined to comment, spent $820,000 in 2021; Taiwan-based chip designer MediaTek spent $650,000, though it doesn’t manufacture chips.
“Like our peers, we’ve expanded our engagement just as we’ve grown every other part of our business,” MediaTek Government Relations Vice President W. Patrick Wilson said in an email.
Even China’s SMIC doled out $180,000 in lobbying expenditures last year, down from $310,000 in 2020. At least some of SMIC’s paid lobbying activity was around “[e]ligibility of [the] company to import U.S.-origin semiconductor-related goods under U.S. export control laws.”
The biggest lobbying spender in the chip industry was Qualcomm, which spent $9.1 million on lobbying last year, up by roughly $1 million from its $8 million expenditures through 2018, according to CRP data. Qualcomm declined to comment.
Intel and rival AMD spent about half of Qualcomm’s total last year. AMD doesn’t manufacture chips, but Intel has announced more than $40 billion in new factory construction in Arizona and Ohio. CEO Pat Gelsinger has said the Ohio plans hinge on federal government support.
One notable outlier in the lobbying expenditure data is graphics and AI chip producer Nvidia hasn’t spent any money on lobbying since 1998, the first year in which records were available.
The $52 billion in funding has received bipartisan support, and a version of the law that includes the subsidies has been passed in the House and Senate. Lawmakers are currently attempting to reconcile the two pieces of legislation before sending legislation to the president’s desk.
The funding is largely popular among lawmakers, but the version of the law under consideration includes a number of provisions around China that contain potentially sensitive partisan issues.
It’s likely President Biden will sign legislation that contains chip subsidies; he discussed the importance of U.S. semiconductor manufacturing during the State of the Union address earlier this year.
Introduced in mid-2020, the Chips for America Act would provide $52 billion in funding to subsidize chip factory construction and fund several research and development initiatives, among other things.
Although the U.S. doesn’t produce many chips itself, American businesses control most of the world’s intellectual property and chip design expertise. The legislation aims to encourage chip companies to build more factories, or fabs, in the U.S. and help rejuvenate domestic production of chips, which are seen as vital for national security.
Additional reporting by Ben Brody.