Trump's chip subsidy renegotiation casts uncertainty over Samsung, SK hynix
The Trump administration is renegotiating subsidies pledged under the previous Biden administration's CHIPS Act, sparking concerns that South Korean chipmakers Samsung Electronics and SK hynix might see cuts in funding for their US investments.
US Commerce Secretary Howard Lutnick told the Senate Appropriations Committee that some of the subsidy agreements reached during the Biden administration 'just seemed overly generous, and we've been able to renegotiate them,' according to Reuters.
'All the deals are getting better, and the only deals that are not getting done are deals that should have never been done in the first place,' Lutnick was quoted as saying.
His remarks suggest that not all grants pledged under the CHIPS Act will be paid out as originally committed, leaving chipmakers who were counting on the funding for their large-scale US projects in doubt.
From the campaign trail, US President Donald Trump repeatedly called for the repeal of the subsidies, arguing that imposing tariffs, instead of grants, would be more effective to lure chipmakers to set up manufacturing facilities in the US.
During an address to a joint session of the US Congress in March, Trump said the CHIPS Act is a 'horrible thing' and called for its removal.
In 2022, then-US President Joe Biden signed the CHIPS and Science Act, allocating $39 billion in subsidies and grants for semiconductor companies setting up manufacturing and research facility in the US. Among the beneficiaries were chip heavyweights including Taiwan's TSMC, Korea's Samsung and SK hynix, as well as US-based Intel and Micron.
Any delays or renegotiated terms for investment could deal a blow to Samsung and SK hynix, who had already pledged to invest tens of billions of dollars to build new advanced chip facilities. Depending on funding plans, they may be forced to reconsider their US investment strategies.
Samsung is investing over $37 billion to build two new advanced fabrication plants and an R&D facility in Taylor, Texas. In return, the company has been awarded $4.74 billion in direct funding.
SK hynix has secured $450 million in direct funding for a $3.87 million investment in building an advanced chip packaging plant and an R&D center in West Lafayette, Indiana.
Regarding the future of their funding, a Samsung Electronics official said the company is monitoring the situation. An SK hynix official said there was nothing to comment on at this time.
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