The Biden administration will enact the so-called “Semiconductor Support Act (CHIPS)” in 2022

Taiwan’s TSMC on alert over possible reduction of subsidies Cold water concerns for Arizona semiconductor project Trump “Taiwan erodes U.S. semiconductor industry” Semiconductor Support Suspended? Trump’s Review Announced

The Biden administration will enact the so-called “Semiconductor Support Act (CHIPS)” in 2022. CHIPS 법안의 공식 명칭은 ‘Creating Helpful Incentives to Produce Semiconductors for America Act’입니다. In translation, it is a bill to create incentives to promote semiconductor production. The law was signed by President Joe Biden in August 2022. Funding companies that build, expand, and modernize their semiconductor manufacturing facilities in the United States is key. A whopping $52 billion federal budget will be spent. In order to strengthen semiconductor manufacturing in the United States, we select and support projects that meet specific qualifications. Projects with capital investments of at least $300 million are targeted. Representatively, Samsung Electronics, Intel, TSMC, Micron, and Global Poundless benefited. However, things are about to change with President Trump’s election. What will happen to the fate of the Chips Act, and to non-U.S. companies that have signaled a massive investment?

Supply chain shock start-up reshoring policy

After COVID, U.S. Pushs Semiconductor Companies’ Reshoring Policy I suffered from a shortage of semiconductors as the supply chain was paralyzed. As a representative example, U.S. automakers have not been able to produce cars on time due to a shortage of semiconductors. Public opinion erupted when the United States, which actually has design technology and produces equipment, experienced a shortage of semiconductors. “Semiconductors manufactured in the United States account for only about 12% of the world’s total, down significantly from 37% 30 years ago,” the White House claims at the time. The Chips Act is enacted because of this public opinion. Thanks to significant federal support, the total value of semiconductor projects in the United States, which will be completed by 2030, is reportedly between $223 billion and $260 billion. The size of the announced project alone is estimated to be $139 billion, the projects in progress are estimated to be $44 billion, and the projects under construction are estimated to be $40 billion to $80 billion. The size of the subsidy is also different. Intel will reportedly receive $8.5 billion, Intel $6.6 billion, and Samsung Electronics $6.4 billion.

But Trump has slammed these Biden administration policies since he was a candidate. In particular, the target was targeted at the Taiwanese company TSMC. TSMC is on alert. The Biden administration said it would provide subsidies worth $6.6 billion on the condition that TSMC build a semiconductor plant in the U.S., because Trump is likely to put the brakes on it. “Taiwan has taken away the U.S. semiconductor industry,” Trump said in June this year, arguing that “it is unfair for the U.S. to give billions of dollars to a country as rich as Taiwan.” At the time, Trump’s remarks caused TSMC shares to fall, and TSMC had complained. Currently, TSMC is building three semiconductor plants in Phoenix.

The problem is that Trump is making more demands on Taiwan. In an interview with Bloomberg and Business Week in July this year, Trump said, “Taiwan has taken almost 100% of the U.S. semiconductor industry,” adding, “The U.S. is no different from insurance companies.” Taiwan should pay the U.S. for its defense.” There is currently no defense treaty between the United States and Taiwan. However, it is only defending Taiwan in accordance with the U.S. domestic law that regulates relations with Taiwan.

Trump “Why would you give me a subsidy” The fate of the Chips Act…

Trump is effectively indicating that he will charge for it. Trump’s remarks are a state of emergency. Senator Mark Kelly warned that “Trump is failing his efforts” and that “it will hurt Arizona’s economy.” More than 35 semiconductor companies are currently looking to move to Arizona, which is criticized for being sprayed with cold water.

The current concern is whether Trump will withdraw his subsidy policy or not. Considering that the Semiconductor Support Act has actually been pushed since the Trump administration, there is a prospect that it will not overturn it. But Axios in the U.S. believes the Trump administration will cut the pie by $59 billion. He has so far spoken about energy policy, mainly by encouraging the fossil fuel industry and drastically easing environmental regulations. He also criticized renewable energy as “expensive and inefficient” and said he would stop developing wind energy in particular. For this reason, some in the U.S. semiconductor industry predict that Trump may include energy companies as targets for semiconductor support. The logic is that since semiconductors consume enormous energy, the energy industry can also be eligible for semiconductor support.

In the worst case scenario, it is hard to rule out the possibility of trade retaliation. In fact, Trump said earlier, “I didn’t have to pay a single penny. It was possible to do so with a series of tariffs. I mean, they’re going to have a very high tariff so that they can come and set up a semiconductor company for free.” The message is that we will impose tariffs so that companies can come to the United States and build themselves. Semiconductors are exempt from tariffs under the South Korea-U.S. free trade agreement, but there is also a possibility that Article 232 of the Trade Expansion Act and Article 301 will be applied for reasons of national security and unfair trade practices.

Problems the U.S. hasn’t thought about.

TSMC is one of the largest foreign direct investors in the United States. It said it would invest an additional $40 billion to build a second plant in Arizona. Samsung Electronics is currently building a four-nano process foundry in Taylor, Texas, with a total investment of $17 billion. As the controversy grew, TSMC said in a statement that the decision to expand fab in the U.S. was based on consumer demand and that it “will continue to invest and do our best to serve customers in the U.S. and around the world.” Intel also claimed that the “Chips Act has strong support from both parties” and that it is the only U.S. company to design and manufacture state-of-the-art chips. But there’s something the U.S. government misses. The fact is that there has been no large-scale fab construction in the United States for more than 20 years. In the United States, we have little know-how in special projects to build fabs.

That’s how difficult it is to hire related personnel. Moreover, numerous projects are operating at the same time, resulting in bottlenecks. “Once the fab is complete and open, we need to hire the technical staff we need to operate, which could be challenging,” McKinsey said. In general, making semiconductors requires cooperation from more than five countries. Semiconductor manufacturing processes typically have to go through various stages, from raw material procurement to wafer manufacturing, chip manufacturing, assembly and testing, and final products. The value chain was not created overnight. Labor costs in the U.S. are relatively higher than in many other semiconductor manufacturing countries, environmental regulations in the U.S. are strong, and raw materials and intermediate products needed to manufacture semiconductors are mainly produced in Asia. This is why it will take a considerable amount of time to produce proper semiconductors in the United States, even if the chip method is still alive.

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