Samsung Electronics and SK hynix have secured promised funding for new semiconductor plants in the US, but uncertainty remains over whether they can fully access the funds under the incoming Donald Trump administration.
The US Department of Commerce confirmed that both chipmakers will receive funding under the Joe Biden administration’s CHIPS and Science Act, which aims to attract more companies ― both American and foreign ― to invest in and manufacture chips in the US. The latest announcement comes as the Biden administration has been racing to deliver billions of dollars of promised chip grants to companies before Trump takes over.
Samsung, the world's largest memory chip maker, was awarded $4.745 billion in subsidies on Friday for its over $37 billion investment pledged in the coming years to expand its facilities in central Texas. The project includes construction of two new advanced logic fabrication plants, or fabs, as well as a research and design facility in Taylor and the expansion of an existing Austin facility, according to the Commerce Department.
The Samsung award is about $1.7 billion less, a drop of approximately 26 percent, compared to the $6.4 billion initially announced when the two parties signed a preliminary memorandum of terms in April. At that time, Samsung pledged to invest roughly $45 billion in total.
The reduced amount appears to reflect Samsung’s revised investment from $45 billion to $37 billion.
A commerce department spokesperson told Reuters that the government “changed this award to align with market conditions and the scope of the investment the company is making.”
Samsung’s smaller memory chip rival SK hynix was awarded $458 million in direct funding Thursday, as well as up to $500 million in loans.
The final package is slightly more than the initial $450 million promised in the preliminary contract signed in August.
The grant will support the company’s $3.87 billion investment to build the advanced chip packaging plant and an R&D center in West Lafayette, Indiana. The facility will have an assembly line to mass produce the next generation of high-bandwidth memory chips, a crucial component of graphic processing units for AI processors.
While the long-awaited fund confirmation provides some relief for the chipmakers, the companies now face the challenge of navigating whether Trump’s incoming administration will honor the funding agreements.
The former president, who is set to take office on Jan. 20, has previously criticized the CHIPS Act as being “so bad.”
“We put up billions of dollars for rich companies,” Trump said on the "Joe Rogan Experience" podcast in October, adding the US should have instead used tariffs to push companies to build chip facilities in the US, rather than subsidies.
Amid raised concerns that Trump could abandon the CHIPS Act, observers say it would be difficult for Trump to unilaterally repeal the bipartisan bill, as it was enacted by the US Congress. But he could obstruct its implementation, potentially delay or limit funds or renegotiate agreements as part of his cost-cutting measures led by the new “Department of Government Efficiency.”
Observers say Korean companies need to brace for potential changes under the new administration.
Park Jung-hyun, a partner at Lee & Ko, said at a forum held by the Korea Chamber of Commerce and Industry that CHIPS Act subsidies are likely to focus on US companies or those included in US-centric supply chains.
“Domestic companies need to actively pursue outreach efforts to be recognized as part of these supply chains,” said Park.
Park further warned that Trump might seek to terminate subsidy agreements even after disbursements, urging companies to “check their contractual terms and strictly comply with federal regulations” to avoid potential challenges.
By Ahn Sung-mi (sahn@heraldcorp.com)
