The site of the foundry plant under construction by Samsung Electronics in Taylor, Texas, USA (Image courtesy of Samsung Electronics)
WASHINGTON & SEOUL, Dec. 21 (Korea Bizwire) – The Biden administration has reduced subsidies for Samsung Electronics’ semiconductor investments in the United States by 26%, sparking questions about the rationale behind the decision.
The U.S. Department of Commerce announced on December 20 that Samsung will receive $4.745 billion (approximately 6.9 trillion won) in subsidies under the CHIPS Act. This is a significant reduction from the $6.4 billion (9.2 trillion won) outlined in a preliminary agreement in April.
While Samsung’s subsidy-to-investment ratio remains higher than that of competitors like TSMC, Micron, and Intel, the magnitude of the cut has drawn attention.
The subsidy reduction coincides with a decrease in Samsung’s planned U.S. investments. The company had initially committed $44 billion by 2030, including the construction of advanced semiconductor manufacturing facilities in Texas.
However, this figure has been scaled back by 16%, to $37 billion, prompting the Commerce Department to adjust its subsidy offering.
A semiconductor factory being built by Samsung Electronics in Taylor, Texas, USA. (Image courtesy of Samsung Electronics)
While market conditions and investment scope were cited as reasons for the adjustment, the deeper subsidy cut—26% compared to the 16% reduction in investment—has raised questions.
Experts suggest that some planned expenditures may have been deemed ineligible following the department’s review process.
The CHIPS Act, passed with bipartisan support in 2022, aims to increase U.S. production of advanced semiconductors to 20% of global output by 2030, up from nearly zero today.
The law incentivizes leading global chipmakers like Samsung, TSMC, Intel, and Micron to establish state-of-the-art manufacturing facilities in the U.S.
The subsidy decision also comes against the backdrop of political changes, with the Trump administration set to assume power in January 2025.
President-elect Trump has previously expressed a preference for tariffs over subsidies to boost domestic semiconductor production, calling subsidies “bad policy.” His administration’s approach to implementing the CHIPS Act remains uncertain.
Although Trump’s proposed reliance on tariffs contrasts with Biden’s subsidy-driven strategy, experts anticipate bipartisan support for continuing investments under the CHIPS Act.
The practical implementation of subsidies, tied to the progress of investments, will unfold primarily during Trump’s term, leaving stakeholders closely monitoring future developments.
Kevin Lee (kevinlee@koreabizwire.com)
