WASHINGTON, DC: The US Trump administration is reportedly planning to renegotiate the Chips and Science Act deals finalised under the previous administration, putting Korean chipmakers on edge as the subsidies promised to them face uncertainty.
According to Reuters on Friday (Feb 14), the White House is seeking to review federal subsidies the Joe Biden administration promised to global chip makers for their investment in the US, signaling potential delays to upcoming disbursements.
The White House is apparently concerned about many of the terms underpinning the US$39 billion chips programme subsidies, Reuters said, citing sources familiar with the matter. These include the condition that recipients must use unionised labour to build factories and help provide affordable childcare for factory workers.
For Korean chipmakers Samsung Electronics and SK hynix, the move may deal a heavy blow to their advanced semiconductor production facilities currently under construction in the US.
Samsung, the world’s largest memory chip-maker, has pledged to invest over US$40 billion to build two new advanced chip manufacturing facilities in Taylor, Texas. To support the investment, the US Commerce Department under the Biden administration agreed to award US$4.74 billion in direct funding.
To SK hynix, which also plans to build a chip packaging plant in Indiana with an investment of US$3.87 billion, the Biden administration has promised up to US$450 million in direct funding.
Each award recipient has distinct terms and milestones they need to achieve to receive the federal subsidies, and the Trump administration is likely to renegotiate these conditions.
Last month, Trump's Commerce Department Secretary nominee Howard Lutnick has expressed the intention to review the chip subsidy deals, saying he "cannot honor something he hasn't read."
Lutnick said, "to the extent monies have been disbursed, I would commit to rigorously enforcing documents that have been signed by those companies to make sure we get the benefit of the bargain," during his Senate confirmation hearing on Jan. 29.
Regarding Friday's report, the biggest recipients, including Intel, TSMC and the Korean chipmakers, did not comment.
GlobalWafers, a silicon wafer supplier based in Taiwan, told Reuters that the company’s direct funding agreement confirmed under the Biden administration, is now “under review” after being told certain conditions do not align with Trump’s executive orders and policies. Under current agreement, the company is set to receive US$406 million of the federal subsidy for its projects in Texas and Missouri.
“The CHIPS Programme Office has told us that certain conditions that do not align with President (Donald) Trump's executive orders and policies are now under review for all CHIPS Direct Funding Agreements,” GlobalWafers spokesperson Leah Peng said.
The White House is also reportedly "frustrated" by the recipients announcing large expansion plans in China, when the chips programme is primarily designed to strengthen the US chip manufacturing against competition from the Asian country.
Samsung and SK hynix could be further restricted in their operations in the country under this sentiment, as both run facilities that produce meaningful portions of their memory chip products in China.
As Trump ramps up pressure on the global market with various tariffs, the chip renegotiation is expected to further burden Korean chipmakers, which are already facing fierce competition with artificial intelligence technology reshaping the industry landscape. - The Korea Herald/ANN
