A general view of the Samsung Austin Semiconductor plant in Taylor, Texas (Getty Images)
Samsung Electronics and SK hynix, the nation’s top two chipmakers, are apparently in a rush to secure subsidies for their massive facility spending in recent years in the US, following a fresh threat from President-elect Donald Trump that he could cancel the promised Chips Act federal funding.
On Monday, Vivek Ramaswamy, one of the leaders selected by Trump to head the proposed Department of Government Efficiency alongside Tesla founder Elon Musk, hinted at the possibility of subsidy cuts, saying “Wasteful subsidies under the IRA & CHIPS Act are being rapidly pushed out before Jan 20.”
Trump has criticized President Joe Biden’s Chips Act as “so bad,” claiming that tariffs are the key to boosting domestic manufacturing, but he has yet to propose specific changes to the law.
The possible reversal in US policies come after Samsung, the world’s largest memory chip maker, has pledged to invest over $40 billion to build two new advanced chip manufacturing facilities in Taylor, Texas, in hopes of receiving up to $6.4 billion in federal funding. Its crosstown rival SK hynix also plans to build a chip packaging plant in Indiana with an investment of $3.87 billion and the Biden administration has promised to offer up to $450 million in direct funding.
Under the Chips Act, five chip makers, TSMC, GlobalFoundries, Rocket Lab, BAE Systems and Intel, have received grants worth more than $16 billion combined. Samsung and SK hynix, together with Micron Technology, are the three companies still working to finalize the deals during Biden’s presidency.
Despite uncertainties, chances seem open for the funding to be made as promised. “I’d like to have really almost all of the money obligated by the time we leave,” US Commerce Secretary Gina Raimondo recently told Politico, the US-based news outlet. “That’s the goal, and I certainly want to have all the major announcements done as it relates to the big, leading-edge companies.”
Industry watchers here showed cautious optimism about the subsidy outlook, considering US tech giants are highly reliant on advanced chips made by Samsung and SK.
"Trump is an unexpected figure, but subsidies are crucial for anchoring global chip manufacturers on US soil. And American tech giants need those advanced chips," said Lee Jong-hwan, a system semiconductor engineering professor at Sangmyung University.
But he added that Samsung could see some reduction in the promised subsidies like Intel did.
Amid uncertainties growing over the incoming president and policy changes, both Samsung and SK have been beefing up their US operations over the past months.
Samsung Electronics recently merged Samsung Federal, a research institute under Samsung Advanced Institute of Technology in Silicon Valley, into its own subsidiary, while SK hynix established a new US office in West Lafayette, Indiana.
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