US Discusses Early Vote on $52 Billion Semiconductor Act... Likely Minimal Impact on Samsung's Texas Investment

China's Trade Sanction Provisions Expected to Ease
Some View as Positive Move to Remove Uncertainty

The site of the $17 billion (approximately 21 trillion KRW) foundry (semiconductor contract manufacturing) plant that Samsung Electronics is promoting in Taylor, Texas, USA, as of May 27. (Image source=Yonhap News)

[Asia Economy Reporter Moon Chaeseok] As the U.S. Congress moves to pass a bill providing $52 billion (about 69 trillion won) in support for domestic semiconductor manufacturing facilities, analyses suggest that the impact on Samsung's factory establishment in Taylor, Texas, will not be significant. If the bill passes after the vote, it is expected that the level of U.S. trade sanctions against China will be lowered, but the '52 billion dollar support' measure is likely to remain intact, which is widely seen as a positive factor in terms of reducing uncertainty.

According to industry sources and foreign media on the 15th, Chuck Schumer, the U.S. Senate Majority Leader from the Democratic Party, said the first vote on the domestic semiconductor industry promotion bill could be held as early as that day (local time). Due to delays in passing the U.S. semiconductor industry promotion bill caused by differences between the Democratic and Republican parties, the Democrats plan to prioritize passing a bill containing only the core provisions.

The semiconductor industry promotion bills in both houses of the U.S. Congress have been adjusted to strengthen measures to counter China. It is said that the 'America COMPETES Act (ACA)' passed by the House in February this year contains stronger China sanctions than the 'U.S. Innovation and Competition Act (USICA)' passed by the Senate in June last year. To finalize the legislation, the merged version of the two bills must be approved by a conference committee and then passed by both the House and Senate before receiving President Joe Biden's signature. The ACA includes provisions such as ▲foreign investment review mechanisms and ▲limits on maximum duty-free thresholds targeting China. Jeong Min, a research fellow at Hyundai Research Institute, explained, "The ACA also includes changes to trade regulations, such as strengthening China's anti-dumping rules."

Global chip manufacturers identified as beneficiaries of the bill are closely monitoring the voting situation. In particular, Samsung Electronics, which plans to invest over 20 trillion won to build a foundry (semiconductor contract manufacturing) plant in Taylor, Texas, is also observing the situation. Since the principle of '52 billion dollar support' remains intact, the industry consensus is that there will be no significant impact compared to before. Even if the merged bill retreats from the China trade sanction provisions contained in the ACA, it is expected to have little impact as long as it does not affect tax benefits and subsidies provided by the state of Texas and Taylor city authorities. Kim Yangpaeng, a senior researcher at the Korea Institute for Industrial Economics and Trade, said, "There is considerable opposition from U.S. companies regarding the China sanctions in the ACA, and political discussions in the U.S. are proceeding with this in mind," adding, "As long as the $52 billion support remains, the impact on investments (such as Samsung's) will be limited."

The industry views Texas state tax benefits as a more important issue for Samsung Electronics. So far, it is known that Samsung has secured promises of tax benefits and subsidies from the Texas state government and Taylor city authorities. However, the specific details of the support have not been finalized. Samsung has not officially announced a concrete schedule for the groundbreaking ceremony in the second half of the year. However, speculation suggests that the policy support from the state and city authorities will likely be based on Texas state incentive programs, such as property tax reductions by the state government for 10 years if high-wage, full-time jobs are created.

An industry official said, "Since the federal and state government systems differ, even if the merged USICA and ACA bill passes in the U.S. Congress, it will not significantly affect policies in Texas and other states."

This content was produced with the assistance of AI translation services.