US Commerce Department Director: "Semiconductor Subsidies Offer Proximity Advantage Despite Price Gap with Asia"

The person in charge of the practical operations of the U.S. semiconductor support law (CSA) program acknowledged that it would not be easy to narrow the production cost gap with Asia using support funds exceeding 50 trillion won, but said that accessibility to U.S. customers could be strengthened instead.

According to Bloomberg on the 27th (local time), Mike Schmidt, director of the U.S. Department of Commerce's semiconductor support law program, attended an event hosted by the Information Technology and Innovation Foundation (ITIF) and said this after hearing opinions that semiconductor factories in Taiwan have 40% price competitiveness compared to the U.S. and that even with subsidies, producing semiconductors in Asia is cheaper.

[Image source=AP Yonhap News]

Director Schmidt acknowledged that the U.S. semiconductor market environment lags behind Asia in terms of price competitiveness. While stating that the CSA aims to reduce this gap in the short term, he said, "I am confident that over the next 10 years, the cost of doing business here (in the U.S.) will become sufficiently competitive by creating a large enough scale, sufficient clusters, and innovation."

However, Schmidt emphasized, "As one country, we have many strategic advantages." He evaluated the $39 billion semiconductor production facility subsidy as an initial capital investment to build a self-sufficient and competitive ecosystem. He added, "The price difference may not be reduced, but there are many attractive aspects to doing business in the U.S., including the presence of the world's major semiconductor customers."

The U.S. Department of Commerce is currently reviewing letters of intent for production facility subsidies from semiconductor companies. On the 14th, U.S. Secretary of Commerce Gina Raimondo stated that more than 200 letters of intent had been received. The Department of Commerce plans to expand the team led by Director Schmidt, who is in charge of this, from the current 80 members to 150 by the end of this year.

Schmidt said, "(Regarding the selection of companies for subsidy applications) difficult choices will have to be made," adding, "Many excellent applicants will not receive as much funding as they want. Some applicants may not receive any at all."

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