[News] Asia’s Chip Giants Diverge in Progress on U.S. CHIPS Act, as TSMC Reportedly to Secure Funding Soon

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With Donald Trump’s victory in the U.S. presidential election, the whole semiconductor industry, especially those Asian-based tech giants making strides in overseas expansion, are concerned about the development of the U.S. CHIPS and Science Act.

According to the latest reports by Bloomberg and Business Korea, while TSMC has finalized binding agreements for multi-billion dollar grants and loans to back its U.S. factories, Samsung and SK hynix are both concerned that potential reductions in semiconductor subsidies could result from policy amendments.

Regarding who may be receive the funding from the Biden administration soon, another report by Reuters names TSMC, GlobalFoundries and at least one other chipmaker as the lucky ones.

The Reuters report further explains that the U.S. Commerce Department recently informed Congress that at least three companies are near receiving their final awards. Under the CHIPS Act, the Commerce Secretary is required to notify the relevant committees at least 15 days before finalizing any deal over USD 10 million, according to Reuters.

TSMC More Assured as Binding Agreements Reportedly Finalized

According to Bloomberg, the CHIPS Act allocated USD 39 billion in grants, along with additional billions in loans and 25% tax credits, aimed at revitalizing U.S. semiconductor manufacturing after years of production moving to Asia. At this moment, over 20 companies are in line to receive government funding, which suggests that it is highly probable that some of the funding will be finalized under Donald Trump’s leadership when he takes office in January, 2025.

Following Trump’s previous remarks that the CHIPS and Science Act is “so bad” and House Speaker Mike Johnson’s suggestion that Republicans may try to repeal the Act if they win Congress, industry officials are eager to finalize matters quickly, both to ensure that funds begin flowing to projects meeting established benchmarks, according to Bloomberg.

TSMC’s package, announced in April, includes USD 6.6 billion in grants and up to USD 5 billion in loans to aid the construction of three semiconductor factories in Arizona, with the total capital expenditure for the site amounting to more than USD 65 billion, according to its press release.

The deal, initially announced as tentative agreements earlier this year, comes as the Biden administration pushes to disburse funds before the end of its term in January, according to Bloomberg. Though it remains uncertain when the agreements will be officially signed and the incentives revealed, the award amounts are rumored to align with the preliminary agreements.

Samsung and SK hynix More Concerned about Direct Losses if Subsidies Are Not Granted

On the other hand, South Korean memory giants Samsung and SK hynix are more concerned that whether semiconductor subsidies may be reduced due to potential cuts to the U.S. CHIPS and Science Act.

Both companies are set to receive subsidies—around USD 6.4 billion in direct funding for Samsung and USD 3.87 billion for SK hynix—on the condition that they establish semiconductor manufacturing plants in the U.S.

However, an industry official cited by Business Korea stated that while the scale of the subsidies has been confirmed, the timing of the payments remains uncertain, which is worrisome. If the subsidies are not granted, it will result in direct losses.

Samsung had planned to invest USD 44 billion to build two semiconductor plants and an advanced packaging R&D center in Taylor, Texas. However, due to its current struggles, it has reportedly delayed construction and orders for the second foundry plant in Taylor.

Furthermore, concerns are also rising about the potential negative impact on semiconductor exports due to the U.S. government’s policies toward China. According to the Business Korea report, a reduction in Chinese finished product exports to the U.S. would likely cause a decline in sales for Korean companies that export intermediate goods, such as semiconductor equipment.

Not all news is bad news, though. An industry observer cited by Business Korea notes that although China is still unable to produce advanced process DRAM, they are quickly closing the gap in general semiconductor production. If Chinese memory companies face tighter regulations, it could lead to indirect advantages for their South Korean counterparts.

Read more

• [News] With Trump’s Odds of Winning Rising, Concerns Arise on Potential Adjustments in Chip Subsidies
• [News] TSMC’s First Plant in Arizona Achieves Early Chip Production Yields Higher than Taiwan’s

(Photo credit: TSMC)