Intel likely to beat Samsung, TSMC to Chips Act subsidies

Tech

Published: 19 Feb. 2024, 17:21 Updated: 19 Feb. 2024, 18:20

Intel likely to beat Samsung, TSMC to Chips Act subsidies

President Joe Biden speaks during a groundbreaking for a new Intel computer chip facility in New Albany, Ohio, Friday, Sep. 9, 2022. [AP/YONHAP]

Intel is likely to beat out TSMC and Samsung Electronics in receiving incentives from the Biden administration’s subsidy program aimed at bringing chip manufacturing facilities to its home turf.

The U.S. government is deliberating on granting Intel subsidies of more than $10 billion, including both grants and loans from the Chips and Science Act, according to Bloomberg on Saturday, citing it as "the largest award yet" under the initiative.

The subsidy program was drafted by the Biden administration in 2022 in an effort to curb China from gaining supremacy in chips technology by bringing the supply chain to U.S. soil. It provides $52.7 billion for various chip facilities, $39 billion of which is allocated to grants for manufacturing.

The subsidy program drew over 460 applicants from around the world seeking U.S. federal funding, leading to the announcement of $231 billion in investments from chipmakers in the private sector.

Intel, which is vying to reclaim its dominance in the chip industry, announced a number of expansion plans in the U.S. It pledged $20 billion to build a new chip fabrication plant in Ohio in addition to $20 billion for the expansion of Arizona facilities and $3.5 billion in New Mexico.

TSMC and Samsung Electronics also announced a $40 billion project in Arizona and a $17 billion project in Texas, respectively, in their efforts to receive funding.

The logo for the Intel Corporation is seen on a sign outside the Fab 42 microprocessor manufacturing site in Chandler, Arizona, U.S., October 2, 2020. [REUTERS/YONHAP]

Stalled negotiations with the U.S. government over subsidy payouts, however, posed a major obstacle in carrying out the construction as planned.

The timeline of Intel's Ohio project was recently reported to have been pushed back due to unfavorable market conditions and the slow rollout of the U.S. grant money.

It was supposed to initiate production next year but construction itself has been pushed back to late 2026, The Wall Street Journal recently reported.

Operation time for TSMC's second plant in Arizona has been delayed to 2027 or 2028, compared to the initially announced 2026, according the Taiwanese chip giant's chairman, Mark Liu, during a recent earnings call.

The postponement derives from "how much incentives the U.S. government can provide," the chairman said.

Production of its first Arizona plant had been already delayed last year from 2024 to 2025 due to a lack of local high-quality workers.

Samsung Electronics' fabrication plant for advanced chips in Taylor, Texas is also struggling to secure grants, pushing back its estimated mass production timeline from 2024 to 2025.

SK hynix, another Korean candidate eligible for subsidies, hasn't confirmed its packaging plant site announced as part of a $15 billion U.S. investment in 2022 in a bid to gain an upper hand in the negotiation process, refusing to comment on recent reports that it settled on Indiana.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]