U.S. President Donald Trump made a bombshell statement, declaring that he would abolish the semiconductor support law (CHIPS Act) promoted by the Biden administration and eliminate subsidies meant to support companies like Samsung Electronics and SK hynix. Experts believe that while it is nearly impossible to completely repeal the bipartisan semiconductor law, there is a high likelihood that President Trump will pressure Samsung Electronics by eliminating or reducing subsidies while scrutinizing the details and conditions of the semiconductor law throughout his term.
During a joint speech to Congress on the 4th (local time), President Trump criticized the semiconductor law as "terrible" and said, "We are giving hundreds of billions of dollars (in subsidies) but it means nothing, and we need to eliminate the semiconductor law and everything else." He later told House Speaker Mike Johnson, "That money should either be used to reduce debt or be used however they want." Throughout this time, Trump has expressed a critical stance on the semiconductor law, arguing that high tariffs can attract investment without giving subsidies to corporations. Last month, the Trump administration declared that it would completely re-examine the conditions for the disbursement of semiconductor law subsidies.
On the same day, President Trump stated, "What is important for (corporations) is not that we give them money, but that they do not have to pay tariffs," adding, "We do not need to give them money. And they will invest here because they won’t have to pay tariffs if they build (factories) in the U.S." This argues for imposing tariffs on foreign companies like Samsung Electronics, SK hynix, and Taiwan's TSMC instead of granting subsidies as a condition for building factories.
Experts report that, since the subsidies have not yet been fully implemented, it is highly likely that the Trump administration will weaken the law's enforcement by reviewing the indicators set in agreements between the previous Department of Commerce and individual corporations. Kim Hyuk-jung, a deputy researcher at the Korea Institute for International Economic Policy's North America and Europe team, noted, "There is a high probability that they will adopt a method of not providing subsidies if each corporation fails to complete the specified investments within the designated timeframe," adding, "Since Trump also needs justification, he may find a way to scrutinize contracts signed by corporations with the Biden administration more thoroughly to give only part of the subsidies." However, predominant opinion is that it is virtually impossible for President Trump to unilaterally abolish the semiconductor law. To repeal the semiconductor law, which was enacted with bipartisan agreement, consent from Congress is required, which is realistically difficult.
Major global semiconductor companies, including Samsung Electronics and SK hynix, plan to receive subsidies equivalent to 5% to 15% of their investment for building factories in the U.S. Samsung Electronics is constructing a foundry plant in Taylor, Texas, involving a total investment of over $37 billion (approximately 53.74 trillion won) and has contracted to receive $4.745 billion (approximately 7.48 trillion won) in subsidies. SK hynix is in a position to receive up to $458 million (approximately 665 billion won) in subsidies for building a state-of-the-art packaging production site for artificial intelligence (AI) memory in Indiana. However, even if they have signed a contract for the semiconductor law, actual subsidy payments will only be made if certain specified indicators, as determined by agreements between the Department of Commerce and individual corporations, are met. While Samsung Electronics and SK hynix have signed contracts for subsidy payments with the Biden administration, they have not yet received actual subsidies from the U.S. government.
The most difficult situation lies with Samsung Electronics, which is required to make substantial investments amounting to tens of trillions of won in the U.S. Samsung Electronics, which is building a foundry fab with a process under 4 nanometers (1 nanometer is one billionth of a meter) in Taylor, Texas, has currently slowed down its construction pace after completing the basic structure, falling behind its initial target. This slowdown is attributed to difficulties in securing major customers like Nvidia and Qualcomm after already struggling with the advanced foundry processes of 5 nanometers, 4 nanometers, and last year’s 3 nanometers. Given the current situation, prevailing views suggest that Samsung's investment scale in the Taylor plant is likely to fall short of initial expectations. Experts believe that this scenario could provide President Trump with justification to reduce or entirely eliminate subsidies for Samsung Electronics.
Some speculate that corporations, including Samsung Electronics, which have already made investments in the U.S., may engage in legal action if they are denied subsidies without justification. Previously, the Trump administration sparked controversy by directing the dismantling of the Green New Deal policy and stopping the fund disbursement of the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. In response, the House Democratic Appropriations Committee argued that this move constituted an illegal 'expenditure refusal', whereby the president unilaterally rejects legally approved expenditures, and both the federal court in Washington, D.C., and the federal court in Rhode Island issued 'temporary restraining orders' against the Trump administration's funding cessation measures. An industry official stated, "If Trump unilaterally refuses to provide legally effective semiconductor law subsidies, stakeholders like corporations that have already made investments and state governments that promised support will inevitably resort to legal action."