The Wall Street Journal (WSJ) reported on the 28th (local time) that semiconductor companies around the world are at a crossroads of choice between the United States and China due to the US Semiconductor Support Act (CHIPS Act). In particular, it is analyzed that East Asian companies such as Samsung Electronics, SK Hynix, and TSMC, which have factories in China, are increasingly burdened.
The Joe Biden administration released the detailed regulations of the’Guardrail’ (safety device) of the Semiconductor Support Act last week. According to the regulations, companies that have received subsidies from the US government must return the full amount of the subsidies if they “substantially expand” their semiconductor manufacturing capabilities over the next 10 years. State-of-the-art semiconductor production facilities were prohibited from increasing their production capacity by more than 5% and legacy (low-end) semiconductor production facilities by more than 10% for 10 years.
This is a more stringent measure than industry experts expected, the WSJ reported. “(Because of the new rules) a lot of companies will question whether or not they’re going to get support,” said Angela Stiles, an attorney at Akin Gump, a semiconductor company advisory firm.
“Essentially, it is using industrial policy to steer the semiconductor supply chain in the direction the US wants,” said Reba Gujon, head of China corporate advisory at the research firm Rhodium Group.
It also analyzed that this would “send a clear signal to companies that producing advanced semiconductors in China will not be sustainable.”
The WSJ predicted that pressure would be particularly strong for East Asian companies that have already invested billions of dollars in China.
Samsung Electronics and SK Hynix in Korea, and TSMC in Taiwan are applicable. Samsung Electronics is operating a NAND flash production plant in Xian, China, and a semiconductor post-processing plant in Suzhou. SK Hynix operates semiconductor factories in Wuxi and Dalian, and TSMC has factories in Nanjing and Shanghai.
Companies generally refrain from commenting on specifics.
Samsung said, “We have been in close discussions with relevant government agencies in the US and South Korea,” and announced that it plans to decide on the next step after reviewing the details of the funding. Samsung is currently building a $17 billion semiconductor plant in Austin, Texas.
TSMC, which is planning a $40 billion semiconductor investment in Arizona, declined to comment.
SK Hynix, which is promoting the construction of a packaging plant in the United States, said, “Uncertainties regarding the operation of facilities in China have been resolved through intergovernmental dialogue between Korea and the United States,” adding, “We will closely review the announcement from the United States.
“We want American companies to continue doing business in China and with China, and vice versa,” said US Commerce Secretary Gina Raymondo in an interview with the WSJ. I do,” he emphasized.
He said he plans to visit China this fall to maintain communication with China and ensure that US companies operate on a level playing field.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.