'$52 Billion' US Semiconductor Act Discussions Gain Momentum... "Limited Impact on Samsung Investment" (Comprehensive)

China's Trade Sanction Provisions Likely to Be Lowered
Some View It as a Positive Move to Remove Uncertainty

'Samsung in Texas, TSMC in Arizona'
Federal and State Tax Benefits
Many Also Say the Likelihood Is Low

US President Joe Biden holds a semiconductor chip and mentions the purpose of the executive order before signing the executive order on semiconductor supply chain establishment at the White House on February 24 last year (local time). (Image source=EPA Yonhap News)

[Asia Economy Reporter Moon Chaeseok] As the U.S. Congress moves to pass a bill providing $52 billion (about 69 trillion KRW) 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 severity of U.S. trade sanctions against China will be reduced, but the ‘$52 billion support’ provision is likely to remain intact, which is widely seen as a positive development in terms of removing uncertainties.

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 congressional approval caused by differences between Democrats and Republicans, the Democrats plan to prioritize passing a bill containing only the core provisions.

The semiconductor industry promotion bills in both chambers of the U.S. Congress have been adjusted to strengthen measures to counter China. The House-passed ‘America COMPETES Act (ACA)’ in February this year is considered to include stronger China sanctions than the Senate-passed ‘U.S. Innovation and Competition Act (USICA)’ from June last year. For final 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 President Joe Biden signs it. 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 anti-dumping rules."

Global chip manufacturers identified as beneficiaries of the bill are closely monitoring the voting situation. Samsung Electronics, which plans to invest over 20 trillion KRW to build a foundry (semiconductor contract manufacturing) plant in Taylor, Texas, is also observing the situation.

Overall, there is a consensus that as long as the principle of ‘$52 billion support’ remains, the bill will not significantly affect investment by countries outside the U.S. Since the principle of ‘$52 billion support’ is expected to remain when voting begins, the industry consensus is that there will be no major impact compared to before. Even if the merged bill retreats from the China trade sanctions included in the ACA, it is expected to have little impact as long as it does not affect tax benefits and subsidy support from the state of Texas and Taylor city authorities. Kim Yangpaeng, a senior researcher at the Korea Institute for Industrial Economics & Trade, said, "There is considerable opposition from U.S. companies regarding the China sanctions in the ACA, and political discussions are proceeding with this in mind," adding, "As long as the $52 billion support provision remains, the impact on investments (such as Samsung’s) will be limited."

There is also an opinion that the federal bill will have little impact on state governments, making Texas state tax benefits more important. Industry sources unanimously agree that for Samsung Electronics, Texas state tax benefits and other incentives are more critical issues. The consensus is that ‘Samsung is in Texas, TSMC is in Arizona,’ so there is no need to be overly concerned about federal laws. So far, it is known that Samsung Electronics has secured promises of tax benefits and subsidy support from the Texas state government and Taylor city authorities. However, the specific support details have not been finalized. Samsung has not officially announced the groundbreaking ceremony schedule. Speculation suggests that the policy support from the state and city authorities may be based on Texas state incentive programs, such as property tax reductions 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 Congress, it will not significantly affect policies in Texas and other states."

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