US: "No Subsidies if Building Factories in China"... Semiconductor Support Act Faces Vote

[Image source=Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The 'Semiconductor Industry Promotion Act,' which is set for a vote in the U.S. Congress, is expected to include provisions that deny subsidies to companies that build production facilities in China.

According to the Wall Street Journal (WSJ) and others on the 18th (local time), the bill primarily provides $52 billion (65 trillion won) in subsidies and incentives to the U.S. semiconductor industry. This is a distilled version of the semiconductor industry support content from the previously passed Senate and House bills, the U.S. Innovation and Competition Act (USICA) and the America COMPETES Act (ACA). The Senate is scheduled to vote as early as the 19th, with final detailed adjustments currently underway.

The draft amendment under review includes a provision that subsidies will not be provided if advanced semiconductor factories are built in adversarial countries, including China. This is a kind of 'guardrail' to prevent subsidies and tax credit benefits intended to revitalize the U.S. semiconductor industry from benefiting China.

White House spokesperson Karine Jean-Pierre confirmed at a briefing that "the incentives are meant to attract more semiconductor investment here in the U.S., not in China," adding, "The guardrails will help slow the increase of investments in China, making it an important part of the bill." China's semiconductor industry has rapidly grown in recent years and currently accounts for about 10% of the global market.

Additionally, the draft amendment reportedly includes a 25% tax credit for semiconductor and semiconductor manufacturing equipment investments, $1.5 billion for public wireless communication network innovation, $200 million for worker training budgets, and $500 million for international secure communication programs.

However, U.S. semiconductor companies like Intel and the Semiconductor Industry Association oppose the China containment provisions. It had been anticipated that if the bill passed, U.S. Intel, Taiwan's TSMC, and South Korea's Samsung Electronics would be the biggest beneficiaries. Senate Majority Leader Chuck Schumer urged Congress to pass the bill, stating, "We need to move quickly."

Meanwhile, the Biden administration, aiming to reorganize the global semiconductor supply chain centered on the U.S., recently requested South Korea to respond by the end of August regarding participation in the so-called 'Chip4 Alliance.' In response, China has publicly warned that "the disadvantages will outweigh the advantages." Last year, 48% of South Korea's $69 billion memory semiconductor exports were to China.

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