Two Years Since the Implementation of the 'Biden IRA Act': 40% of Projects Delayed or Halted

Biden's Clean Technology and Semiconductor Projects Face Chinese Countermeasures
FT Points to Demand Slowdown and Election Season Policy Uncertainty
Concerns Over Negative Impact on Harris's Campaign

About 40% of major U.S. manufacturing investment projects related to the Inflation Reduction Act (IRA) and the CHIPS and Science Act, promoted by U.S. President Joe Biden, have been reported to be delayed or halted. Although these measures were conceived by the Biden administration to counter China, they are facing significant setbacks.

On the 11th (local time), the UK Financial Times (FT) reported that the Biden administration implemented the IRA and the CHIPS and Science Act in August 2022 to develop clean technology and build semiconductor supply chains, offering over $400 billion (approximately 548.7 trillion KRW) in tax incentives, loans, and subsidies to domestic and foreign companies. However, FT found that about 40% of projects worth over $100 million (approximately 13.7 billion KRW) announced in the first year of the CHIPS and Science Act, totaling $84 billion (approximately 115.15 trillion KRW), have been postponed from two months to several years or indefinitely suspended.

President Joe Biden of the United States
[Photo by Yonhap News]

Among the major projects on hold are Enel’s $1 billion (approximately 1.37 trillion KRW) solar panel factory in Oklahoma and LG Energy Solution’s $2.3 billion (approximately 3.15 trillion KRW) battery factory in Arizona, FT reported. According to industry sources, LG Energy Solution temporarily halted construction of a dedicated lithium iron phosphate (LFP) battery production plant for energy storage systems (ESS) in Arizona just two months after breaking ground in June.

Companies explained that they changed their investment plans due to worsening market conditions, weakened demand, and policy uncertainties during the election season. However, FT pointed out that this raises doubts about President Biden’s bet that bringing back U.S. companies that had moved production overseas and attracting foreign factories could create jobs and economic benefits.

Additionally, it could make it difficult for Vice President Kamala Harris, the Democratic presidential candidate, to leverage the Biden administration’s manufacturing sector achievements to win the votes of "blue-collar" voters in the November election.

However, Alex Zakes, President Biden’s special advisor on economic development and industrial strategy, rebutted by saying the Biden administration has succeeded in boosting construction and manufacturing.

He said, "Of course, we hope that the (delayed or halted) projects will start and proceed as soon as possible," adding, "We continue to work on removing barriers related to permits and financing."