Exclusive: New U.S. development agency could lend billions for relocation, official says
WASHINGTON (Reuters) – US government funding for projects to return critical supply chains to the United States as part of coronavirus response efforts could reach tens of billions of dollars and customers could include a Taiwanese semiconductor forecasted $ 12 billion, the head of the agency managing the funds told Reuters.
The US International Development Finance Corp is in talks with companies about relocating the manufacturing of personal protective equipment, generic drugs and pharmaceutical ingredients, DFC chief executive Adam Boehler said in an interview on Monday.
Boehler said letters of agreement for some initial projects could be signed next month. The Trump administration has pushed here for US companies and importers to move manufacturing out of China.
The agency, which opened in January to boost the United States’ overseas development finance efforts to counter China’s massive Belt and Road infrastructure campaign, has been enlisted in home service in May, after President Donald Trump signed an executive order here under the Defense Production Act.
DFC and the Ministry of Defense have agreed here Monday to jointly administer $ 100 million in supply chain relocation funds from the $ 2.3 billion coronavirus legislation passed in March.
The company’s proposals to relocate are already pouring in, Boehler said.
“The areas that got hot right away are on the PPE side and within pharmaceutical value chains,” Boehler said, adding that there was an interest in returning some of the production of generic drugs – which are almost all imported – to the United States.
The $ 100 million can be turned into “tens of billions of dollars” in loans by using them as a pool of capital similar to the US Treasury’s support for Federal Reserve lending facilities, Boehler said. On this scale, the agency could participate in the financing of the company Taiwan Semiconductor Manufacturing Co Ltd. 2330.TW planned plant in Arizona.
The project is a centerpiece of the push to tackle global technology supply chains from China. TSMC, the world’s largest contract chip maker, is a major supplier to Apple Inc. AAPL.O, Qualcomm Inc QCOM.O and other major US tech companies. nL1N2CW20O
“We offer loans and investment finance, so could we be relevant there? Absolutely. We’re talking tens of billions of dollars of potential here, so that’s a possibility, I wouldn’t rule that out, ”Boehler said.
A finance package for TSMC would likely include private equity from the state of Arizona. It is too early to say if the agency would be able to participate.
“THE FOOT ON THE GAS”
The DFC was created under the 2018 legislation that combined the former Overseas Private Investment Corp (OPIC) and part of the United States Agency for International Development, more than doubling the overall lending and investment capacity. from CIPO to $ 60 billion. Its planned launch in October 2019 was delayed until January by a budget fight in Congress that threatened to shut down the government.
Boehler said DFC’s development mission would not be affected by Trump’s executive order and that it would keep its “foot on the gas” to accelerate projects in poor countries.
The 337-employee DFC – small for a federal agency – adds around 15 people to focus solely on domestic relocation projects, he said, and overseas development funding will remain separate.
The agency approved here $ 1 billion in investments and loans at its June board meeting, including a $ 200 million loan to Banco Industrial de Guatemala to expand lending to small and medium-sized businesses. Boehler said the bank’s board in September would consider a larger list of projects.
Reporting by David Lawder; Editing by Nick Zieminski and Peter Cooney