[Reporter’s Notebook] Companies Frustrated by Delays in U.S. Subsidy Payments

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"If the subsidy payments are delayed, the interest burden on the factory construction costs will increase, and in the worst case, the operation start date may also have to be postponed."

A semiconductor industry official recently met with said this about the potential impact on our companies if the U.S. semiconductor subsidy payments are delayed.

Although the U.S. government has begun to actively distribute subsidies under the CHIPS Act, Samsung Electronics and Taiwan's TSMC, which applied for subsidies, are still waiting their turn.

So far, the U.S. has publicly announced subsidy recipients including the UK’s BAE Systems ($35 million), domestic Microchip Technology ($162 million), and GlobalFoundries ($1.5 billion). While there are expectations that additional subsidy announcements may be made within the next 6 to 8 weeks, uncertainty remains.

Samsung Electronics is building a foundry (semiconductor contract manufacturing) plant in Taylor, Texas. The investment scale announced in 2021 was about $17 billion (22.6882 trillion KRW), but with rising construction costs, it is now expected to exceed $25 billion (33.37 trillion KRW). This is an increase of 11 trillion KRW from the original estimate, and until the subsidies are received, the interest burden falls entirely on Samsung Electronics.

In more severe cases, the start of production facilities could be delayed. Some companies that submitted subsidy applications, such as Intel and TSMC, have postponed their production facility construction schedules compared to their original plans, citing delays in U.S. government subsidy payments.

Of course, the U.S. government did not specify the exact timing of subsidy payments when accepting applications. However, the industry widely assesses that the timing is delayed more than expected. There is an interpretation that U.S. President Joe Biden is weighing the payment timing to showcase economic policy achievements aligned with his re-election campaign this year.

‘Toxic clauses’ in subsidy payments, such as excess profit sharing, are also hindering companies. Although the U.S. has attracted allied companies to strengthen its domestic semiconductor industry, it is unfortunate that the companies that decided to invest are suffering internally.

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