"Thanks to Semiconductor Act and IRA, US FDI Structure Reshaped... Manufacturing Share Doubled"

White House Self-Evaluation: "Bidenomics Achieves Investment Attraction Success"
Manufacturing Facility FDI Increased 247% Year-on-Year Last Year
Manufacturing Share Related to Factory Construction and Expansion Rises to 66%

The U.S. administration under Joe Biden announced that the share of manufacturing in foreign direct investment (FDI) occurring in the United States has significantly increased as the government has implemented extensive manufacturing-centered support measures such as the CHIPS and Science Act (CSA) and the Inflation Reduction Act (IRA). They stated that the incentive effects have led to increased factory construction investments, creating positive economic ripple effects, and self-assessed that the so-called "Bidenomics" is achieving early success.

The White House Council of Economic Advisers (CEA) prepared a report on the 2-year FDI data since President Biden took office in 2021, released on the 23rd (local time). The White House said, "Consumption for construction of manufacturing facilities in the U.S. has surged, and actual manufacturing construction has doubled since the end of 2021," adding, "This is an early sign that Bidenomics is attracting new foreign investment into U.S. manufacturing."

President Joe Biden of the United States

According to the data they presented, the scale of FDI in new manufacturing facilities in the U.S. was $5.3 billion (approximately 7.04 trillion KRW) last year, a 247% increase compared to 2021. The White House explained that this reversed the declining trend that had continued since 2019. They also added that investments to expand existing facilities or build new ones nearby were on par with FDI in new manufacturing.

In particular, looking at the first-year expenditures of new FDI related to factory construction and expansion, the share of manufacturing was 66% last year. This is more than double the 2014?2021 average of 24.5%. Among manufacturing sectors, the White House stated that facility investments in electronics industries, including computers and semiconductors, accounted for the largest share at $1.8 billion last year.

The New York Times (NYT) interpreted this as "the Biden administration’s incentive policies appear to be reshaping FDI in the U.S. economy." In fact, the scale of new FDI during 2021?2022 slightly decreased when adjusted for inflation, indicating that incentives did not expand overall investment, but foreign companies’ investments in the U.S. were made in the intended direction.

The Biden administration implemented the CSA in August last year, providing incentives to companies building semiconductor manufacturing facilities in the U.S., and the IRA, which includes subsidies for purchasing electric vehicles produced domestically. As a result, global semiconductor companies such as Samsung Electronics, Taiwan’s TSMC, and Intel, as well as electric vehicle and battery companies, have competitively decided and announced U.S. investments based on these subsidies, and factory construction is underway across the country.

Within the Biden administration, even if the total investment scale does not expand, they expect positive economic ripple effects if the investment content shifts to manufacturing facilities. Manufacturing jobs will increase, wages for these jobs will rise, and productivity of companies cooperating with domestic manufacturers will improve, creating a virtuous cycle for the U.S. economy.

Regarding the nationalities of investors who made investments in U.S. manufacturing facilities, the White House stated that over 85% were associated with European investors as of last year. Canada followed with 21%, and Japan, Singapore, and Korea combined accounted for about 9%. They added that Chinese investors’ participation in U.S. manufacturing facility investments was less than 0.5%.

Jared Bernstein, CEA Chair, emphasized, "FDI in manufacturing not only helps revitalize core areas of Bidenomics such as semiconductors and clean energy but also allows us to learn valuable production experience from international companies in these fields."

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