Report Citing NYT Sources
Ohio Factory Investment Delayed Due to US Military Contracts and Other Causes
The Biden administration in the United States plans to cut the semiconductor support law (CSA) subsidies promised to Intel by more than $500 million (approximately 700 billion KRW), according to the New York Times (NYT) on the 24th (local time).
NYT, citing sources, reported that the Biden administration intends to reduce the subsidy originally promised to Intel from $8.5 billion (approximately 11.9 trillion KRW) to less than $8 billion (approximately 11.2 trillion KRW) due to Intel's investment delays and management difficulties. However, it added that no final agreement has been reached yet.
Earlier, the Biden administration had reached a preliminary agreement in March to provide Intel with up to $8.5 billion in subsidies and $11 billion (approximately 15.4 trillion KRW) in loans, totaling $19.5 billion. At that time, President Biden visited Arizona, where Intel's factory was to be built, emphasizing that Intel's manufacturing investment would change the landscape of the semiconductor industry.
According to sources, the Biden administration's decision to reduce subsidies this time is due to Intel's delay in factory investment. Intel has postponed its semiconductor factory project in Ohio, originally scheduled for the end of next year, to the late 2020s. Once a dominant player in the global semiconductor market, Intel is now experiencing its worst crisis since its founding, including large-scale layoffs due to poor performance. Recently, competitors such as Qualcomm have reportedly considered acquiring Intel.
Intel's upcoming contract with the U.S. military for semiconductor orders was also cited as a reason for the subsidy reduction. Intel is expected to sign a $3 billion (approximately 4.2 trillion KRW) contract with the U.S. government for semiconductor production for the military, and combining this contract with the CSA subsidies would push Intel's total support over $10 billion.
The NYT noted, "Intel's difficulties have dealt a blow to the Biden administration's plan to revitalize domestic semiconductor production," suggesting that Intel's technology roadmap and customer demand were also factored into the administration's calculations. While Intel is trying to catch up with competitors like Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturer), customers remain unconvinced.
Currently, the Biden administration is accelerating negotiations with individual companies to finalize subsidy payments before Donald Trump, the former U.S. president, takes office in January next year. Although the U.S. Department of Commerce has allocated more than 90% of the subsidies so far, binding contracts are very few, and it is uncertain whether the support will continue under the next administration.
On the 15th, the subsidy payment of $6.6 billion (approximately 9.3 trillion KRW) to TSMC was confirmed. However, other companies such as Intel, Samsung Electronics, and Micron Technology are still reportedly discussing the details of their contracts. The CSA, enacted in 2022 under the Biden administration, provides a total of $52.7 billion over five years, including $39 billion in production subsidies and $13.2 billion in research and development (R&D) support for semiconductor companies investing in the United States.
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