Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
How much in subsidies will Samsung Electronics get for US chip plant?
The construction site of Samsung Electronics semiconductor plant in Taylor, Texas, Jan. 2 / EPA-Yonhap
By Baek Byung-yeul
Media reports estimate $6 bil.-$7 bil. in support
Samsung Electronics is expected to receive more than $6 billion in subsidies from the U.S. government for its semiconductor investments in the country, marking its entry into the heated competition for chip investments alongside Intel and TSMC, according to media reports on Tuesday.
The U.S. Department of Commerce on Monday revealed its support for chip factories by foundry company TSMC with grants totaling $6.6 billion, along with a $5 billion loan. This marks an increase of over 30 percent from the initially expected amount.
The sizable support stems from the CHIPS and Science Act, a chip subsidy program enacted in 2022 aimed at incentivizing companies to construct new semiconductor factories in the U.S.
Such substantial favors do not come without obligations. Taiwanese chip company TSMC announced its intention to increase its investment from $40 billion to $65 billion. Additionally, it plans to construct a third plant in Arizona by 2030.
The announcement regarding subsidies for Samsung is anticipated to be made next week, with foreign media speculating that the Korean chip giant is likely to receive between $6 billion and $7 billion in subsidies. In 2021, Samsung declared its intention to invest $17 billion to construct a new foundry plant in Texas, which is presently under construction.
In response to Washington's subsidy support surpassing expectations, much like TSMC's reaction, Samsung is also anticipated to escalate its investment in the U.S. to over $44 billion, as reported by Reuters.
Should Samsung secure such support, it would mark the third-largest contract with the U.S. government, trailing only behind Intel and TSMC. Last month, the Joe Biden administration unveiled plans to allocate $8.5 billion in subsidies and $11 billion in loan support to Intel. In light of this, Intel intends to invest upwards of $100 billion over the next five years.
Washington has said the support scheme aims to bring back semiconductor manufacturing to U.S. soil, addressing the current overconcentration in Asia. The objective is to produce 20 percent of the world's most advanced semiconductors in the U.S. by 2030.
Analysts perceive Samsung's involvement in the U.S. strategy to enhance its chip capability as advantageous for the company. This move allows Samsung to establish local production bases, enhancing its ability to cater to the demand of its U.S. customers, particularly those specializing in AI chips.
"Samsung Electronics is currently building a foundry plant in Texas, and it will proceed with additional investments to increase its production facilities in the U.S. This will increase its touchpoints with U.S. chip design customers and enhance the competitiveness of Samsung's foundry business," an official in the domestic chip industry said on condition of anonymity.
President Yoon Suk Yeol speaks during a meeting regarding pending issues in the semiconductor industry at the presidential office in Seoul, Tuesday. Yonhap
Meanwhile, concerning Korea's endeavors to bolster and support the chip industry, President Yoon Suk Yeol has pledged bold measures of support for domestic semiconductor companies, particularly focusing on the AI chip sector.
"The earthquake that occurred in Taiwan on April 3 has raised concerns about the global semiconductor supply chain. The impact on our companies is not significant at the moment. However, the situation is still unpredictable, and we must prepare thoroughly without any gaps," the president said during a semiconductor industry strategy meeting at the presidential office in Seoul, Tuesday.
The meeting brought together executives from Samsung Electronics, SK hynix, Naver and Sapeon Korea, as well as the ministers of finance, industry, science, environment and land.
"The current chip competition is an industrial war and a total war between nations. We must have a total response system that matches a wartime situation. We will comprehensively analyze the investment environment and support systems of major countries and prepare bold support measures tailored to Korean conditions,” the president said.