[Asia Economy New York=Special Correspondent Joselgina] The Joe Biden administration is set to fully launch the $53 billion semiconductor support program under the Chips and Science Act (CSA).
According to the Wall Street Journal (WSJ) on the 22nd (local time), U.S. Secretary of Commerce Gina Raimondo is scheduled to unveil detailed requirements, including specific subsidy payment plans for the semiconductor support law, on the 23rd. Additionally, next week, companies will be provided with detailed guidance on how to apply for the funding.
The semiconductor support law primarily provides $53 billion in subsidies for semiconductor factory construction and research and development (R&D) within the United States. It was passed by the U.S. Congress in July last year and enacted with President Biden's signature in August. The Biden administration aims to foster the domestic semiconductor ecosystem through this initiative. It also serves as a check against China, which is openly pursuing technological supremacy. Specifically, $39 billion will be invested in manufacturing-related incentives such as factory construction, and $13.2 billion will be allocated for R&D and workforce training. In addition, a 25% investment tax credit will be provided for semiconductor manufacturing and related equipment.
As President Biden has proudly stated on multiple official occasions, investment results within the U.S. are already following. According to the Semiconductor Industry Association, more than 40 projects have been announced by major companies such as Intel and Micron following the enactment of the law. The disclosed investment scale alone reaches $200 billion. Taiwan's TSMC is pursuing a $40 billion project in Arizona. Samsung Electronics is also investing $17 billion to establish a semiconductor foundry factory in Texas.
However, there are concerns within the U.S. that the semiconductor support law may not be sufficient to meet the challenges currently faced by the American semiconductor market.
The U.S. share of the global semiconductor market has shrunk from 37% in 1990 to a recent 10%. Meanwhile, East Asian countries including Taiwan and South Korea account for 75% of global production, WSJ reported. The outlet also added that the U.S. currently cannot mass-produce advanced semiconductors below 5 nanometers (nm).
John Neuffer, president of the Semiconductor Industry Association, said, "It's a good first step," but emphasized that "the government's continuous and meaningful commitments must continue over a long period." Within the U.S., questions have also been raised about whether there will be enough skilled workers to employ even if manufacturing facilities are built with the help of the semiconductor support law.
Goldman Sachs pointed out that building and operating new semiconductor manufacturing facilities in the U.S. costs 44% more than in Taiwan, and predicted that this semiconductor support law will only raise the U.S. share of global semiconductor production by less than 1%. In a report released at the end of last year, Goldman Sachs noted, "Rather than trying to replace Asia's position and importance within the semiconductor supply chain, the semiconductor support law should be viewed from a geopolitical strategy perspective as a hedge against future crises and major supply chain disruptions."
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