US Completes $53 Billion Chips Act Subsidy Payments... The Real Test Starts Now

The Biden administration's semiconductor law (Chips Act) $39 billion (approximately 53 trillion won) subsidy payment is in its final stages and is about to undergo full-scale testing, Bloomberg reported on the 8th (local time).

The semiconductor law, enacted two years ago in the United States with bipartisan support, is a bill aimed at attracting advanced semiconductor production bases of major global semiconductor companies such as Intel and Micron Technology in the U.S., Taiwan's TSMC, and South Korea's Samsung Electronics to the United States. The goal is to produce about one-fifth of the world's most advanced processors in the U.S. by 2030.

[Image source=Reuters Yonhap News]

Subsidy payments were not easy from the start. Hundreds of companies fiercely negotiated over the subsidies for months. Even within the U.S. government, opinions differed on which parts of the semiconductor sector needed the most support.

The U.S. government decided to provide the largest amount of subsidies to Intel. Commerce Secretary Gina Raimondo called Intel the "champion of America." However, Intel plans to cut 15,000 jobs due to declining sales, and its stock price plunged 26% on the 2nd, reaching its lowest level in 11 years.

The bigger issue is whether the U.S. can maintain its business momentum. The industry has warned that the $39 billion in Chips Act subsidies is not a very large amount. Additionally, more than 160,000 workers need to be employed, and uncertainty due to the presidential election adds to the challenges.

Mike Schmidt, Director of the Semiconductor Program Office (CPO) at the U.S. Department of Commerce, said in an interview, "Both U.S. and foreign companies are currently making large-scale investments in semiconductor manufacturing in the U.S. If asked whether I would do this again two years ago, I would say yes 100 times."

The U.S. priority is to secure advanced logic chips or at least two large-scale manufacturing clusters. Securing packaging plants is also important. When asked how much of the U.S.-made semiconductors could be packaged under the current plan, Schmidt did not provide specific answers. He said, "The supply chain will continue to be global," and "The U.S. has established a strong foothold." The CPO has funded five packaging-related projects so far, one of which will be packaged at a semiconductor facility sent from Korea to the U.S.

There is also the issue of securing labor. According to McKinsey, the U.S. semiconductor industry is expected to face a shortage of 59,000 to 77,000 engineers over the next five years. According to the CPO, more than 80 semiconductor-related programs have been started at universities since the Chips Act passed, but Bloomberg noted that whether the workforce can be secured quickly enough remains a question.

The U.S. presidential election is also a concern. The CPO plans to allocate tens of billions of dollars in remaining subsidies by the end of the year. Although the law passed with bipartisan support, some raise the possibility that former President Donald Trump could repeal the Chips Act provisions if elected.

The CPO stated that the first production supported by the Chips Act could begin by the end of this year but did not specify which company would achieve this.

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