U.S. government financing for reshoring projects to return critical supply chains to the United States as part of coronavirus response efforts could reach tens of billions of dollars and clients may include a projected $12 billion Taiwanese semiconductor plant in Arizona.
The U.S. International Development Finance Corp is talking to companies about reshoring the manufacturing of personal protective equipment, generic drugs and pharmaceutical ingredients, DFC Chief Executive Adam Boehler said in an interview with Reuters on Monday.
Boehler is the agency’s first Chief Executive Officer. His nomination to lead the agency was announced by the White House on July 10, 2019 and unanimously confirmed by the Senate on September 26, 2019.
U.S. International Development Finance Corporation (DFC) is an independent agency of the U.S. Government that provides financing for private development projects. It was created by the bipartisan Better Utilization of Investments Leading to Development (BUILD) Act of 2018, which was signed into law by President Donald Trump on October 5, 2018.
DFC consolidates and modernizes the Overseas Private Investment Corporation (OPIC) and Development Credit Authority (DCA) of the United States Agency for International Development (USAID). In addition to OPIC and DCA’s existing capabilities, DFC is equipped with a more than doubled investment cap of $60 billion and new financial tools.
Boehler said letters of understanding for some initial projects could be signed within the next month. The Trump administration has been pushing here for U.S. companies and importers to move manufacturing out of China.
The agency, which opened its doors in January to boost U.S. overseas development financing efforts to counter China’s massive Belt and Road infrastructure drive, was drafted into domestic service in May, after President Donald Trump signed an executive order here under the Defense Production Act.
DFC and the Defense Department agreed on Monday to jointly administer $100 million in supply-chain reshoring funds from the $2.3 billion coronavirus legislation passed in March.
Company proposals to reshore are already pouring in, Boehler said. “The areas that have come on hot right away are on the PPE side and within the pharmaceutical value chains,” Boehler said, adding there was interest in returning some generic drug production – almost all of which is imported – to the United States.
The $100 million can be leveraged into “tens of billions of dollars” in loans by using it as a pool of capital similar to the U.S. Treasury’s backing of Federal Reserve loan facilities, Boehler said. At that scale, the agency could participate in the financing of Taiwan Semiconductor Manufacturing Co Ltd’s planned factory in Arizona.
The project is a centerpiece of the push to wrestle global technology supply chains back from China. TSMC, the world’s largest contract chipmaker, is a major supplier to Apple…
MacDailyNews Take: Spurred even more by the COVID-19 pandemic, expect U.S. reshoring of critical manufacturing to be an area of strong and growing interest.