'Leading-edge players' may have head start on Chips Act subsidies: U.S. official

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'Leading-edge players' may have head start on Chips Act subsidies: U.S. official

Published: 01 Feb. 2024, 18:51 Updated: 04 Feb. 2024, 13:40

SHIN HA-NEE
shin.hanee@joongang.co.kr

Lynelle McKay, a senior relationship director of the Chips Program Office under the U.S. Department of Commerce, speaks during a presentation at the U.S. Investment Forum, a sideline event of the three-day Semicon Korea 2024 trade fair, held at COEX in southern Seoul on Thursday. [SHIN HA-NEE]

A U.S. Commerce Department senior director said "leading-edge players" might have an advantage in securing subsidies for new chip plants, as they were given earlier opportunities to apply for the incentive program, as expectations surge for the reportedly upcoming announcements for big handouts.

However, as each application will be evaluated at its own separate pace, whether Samsung Electronics will be able to win the highly-anticipated subsidies under the U.S. CHIPS and Science Act in time along with other top contenders such as Intel and Taiwan Semiconductor Manufacturing (TSMC), is yet to be decided.

When asked whether Intel and TSMC will take priorities in incentive rollouts, Lynelle McKay, a senior relationship director of the Chips Program Office under the U.S. Department of Commerce, suggested that as the Notice of Funding Opportunity was opened in March to leading-edge players first, then "it was only natural" they could potentially get there first.

The senior director made the comment during a presentation at the U.S. Investment Forum, a sideline event of the three-day Semicon Korea 2024 trade fair, held at COEX in southern Seoul on Thursday.

McKay, however, stressed that the applicants “are assessed individually,” and “each one is evaluated on its own merits,” which means there will be no set timeline or universal deciding factor for the evaluation process.

The comment comes in as expectations and speculations are growing for the potential announcements of large-scale semiconductor subsidies from the Biden administration, which, according to the Wall Street Journal’s recent report, are likely to be made by early March.

Ever since the enactment of the $53-billion law, over 570 statements of interest and 170 applications have been submitted for the incentive program over about a year and a half, yet only two companies — BAE Systems and Microchip — have been selected to receive them so far.

The Chips Act is aimed at bringing semiconductor manufacturing capabilities, as well as the industrial supply chain, back to the United States.

Samsung Electronics has a $17-billion project under way in Taylor, Texas. The plant is set to begin operations by the end of this year and become fully operational in 2025.

Taiwan’s TSMC pledged $40 billion to establish two new production facilities in Phoenix, but the Arizona project has been delayed due primarily to a shortage of skilled workers. Intel plans to invest over $43.5 billion in multiple projects in Arizona, New Mexico, Ohio and Oregon. Micron Technology will spend $20 billion building a new manufacturing site near Syracuse, New York.

Kim Chang-wook, Boston Consulting Group managing director and partner, suggested in his presentation that the recent update in the Chips Act — which bolstered funding opportunities for part suppliers — signifies that the U.S. government’s focus has been expanded from manufacturing and plant construction to semiconductor equipment and materials.

“The United States has shown signals that if you bring in not only fab [a fabrication plant] but also other components of the supply chain involving equipment and materials in the form of a consortium, it will give you bigger benefits,” said Kim.

Brandt Rydell, mayor of the City of Taylor in Texas, said that the city and the state’s planned tax incentives for Samsung Electronics’ ongoing project are not “conditioned on” the proceedings of the U.S. Federal government’s Chips program, meaning that the delay in its implementation is not likely to affect the city’s execution of tax incentives.

Rydell, in his remarks during the Thursday event, said “Samsung has been a strong partner from the very first day,” contributing to expanding education opportunities and improving the quality of life within the local community.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]