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President Joe Biden speaks during the “First Tool-in” ceremony at the TSMC facility in Phoenix, Arizona, on December 6, 2022. Caitlin O’Hara—Bloomberg/Getty Images
The U.S. government promised incentives for domestic manufacturing through the CHIPS Act and the Inflation Control Act, successfully encouraging major foreign companies such as Taiwan Semiconductor Manufacturing Company, Samsung, and LG to invest in the United States. However, these companies are now concerned about projects in the United States and are wary of high risks. uncertainties regarding costs and subsidies;
Samsung Electronics, the world’s largest memory chip maker, announced in November 2021 that it will invest $17 billion to build a new advanced chip manufacturing factory in Texas, scheduled to begin operations in 2024. However, the cost of the factory quickly rose by more than $8 billion. Reuters reported in March last year that inflation had caused construction and material costs to rise, surprising initial forecasts.
“The U.S. investment plan clearly appears to be an increasing financial burden for global chip makers and other manufacturing companies making capital investments in the U.S.,” said an anonymous source at a South Korean semiconductor maker. . korea times In a report released Wednesday. “Most people would not have expected labor and construction costs to rise at such an alarming pace.”
samsung said luck Construction in Taylor, Texas, is proceeding as originally planned.
South Korean authorities had previously expressed concern about the “unusual” conditions attached to the CHIPS money, particularly those requiring companies to share information about their technology and provide childcare for employees.
There are also problems with TSMC’s project in Arizona, which was celebrated by President Joe Biden at the end of 2022. The world’s largest contract chipmaker announced in January that its second factory in Arizona would start operations in 2027 or 2028, rather than the originally expected 2026. Additionally, the start of operations at the first plant in Arizona has been postponed to 2025. The company also announced that it is in discussions with the U.S. government regarding incentives and tax credits.
By contrast, TSMC’s Japan project, which also receives support from government funding, is faring more smoothly. The smaller project is on schedule to begin production later this year. TSMC also announced plans to build a second factory in the country.
TSMC founder Morris Chan has previously talked about the similarities between Japan and Taiwan’s business and work culture. A person familiar with the matter told Reuters in September last year that TSMC decided that the Japanese government would be easier to deal with.
The Inflation Control Act aims to incentivize clean energy manufacturing and attract more production to the United States, but even this support is not enough to cushion the blow from rising costs and macroeconomic uncertainty. It may not be.
South Korean companies that make electric vehicle batteries are slowing and reevaluating investments in the United States.
SK On, a battery manufacturing affiliate of SK Group, has partnered with Ford to build battery factories in Kentucky and Tennessee. However, the companies have postponed the start of production at one of the two Kentucky facilities to an undetermined date. Another plant in Kentucky is currently on track to open in 2025. Ford executives said last October that the pace of EV adoption was slower than industry expectations.
LG Energy Solutions, the world’s leading EV battery maker, is also scaling back investment in the U.S. The South Korean company laid off 170 workers at its Michigan factory in November, in part because of the shift toward EVs. The transition was slower than expected. LG also shelved plans for a fourth battery factory in the United States in January last year.
LG did not immediately respond. Fortune’s Request for comments.
Some automakers like Ford and General Motors are less optimistic about the pace of EV adoption this year. Possible reasons include increased barriers to accessing tax credits under the American Inflation Control Act and higher interest rates that could impact financing.
And there may be other concerns on management’s minds. There is a possibility that policy will change depending on who wins the US election in November. “We also face political risks ahead of the US presidential election,” said an anonymous semiconductor source. Korea Times.
update: March 14, 2023. This article has been updated with a statement from Samsung.
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