Biden Administration Promises Subsidies to Samsung and Hynix Despite Trump’s Joint Congress Speech Calling to Repeal the CHIPs Act
‘On the 4th (local time), former President Donald Trump announced his intention to repeal the ‘CHIPs Act’ enacted during the previous Joe Biden administration in his first joint Congress speech of his second term. This announcement signals potential trouble for Samsung Electronics and SK Hynix, who were set to receive subsidies under the Biden administration. However, as some Republican lawmakers also supported the semiconductor law, the repeal seems unlikely to be realized.’
‘In his speech, Trump criticized the semiconductor law as “terrible,” stating, “We are giving away hundreds of billions of dollars, but they are not using our money, and it’s meaningless.” He argued that the law, established through bipartisan agreement in 2022, should be abolished. Trump further urged House Speaker Mike Johnson to revoke the law and use the remaining funds to reduce government debt or for other purposes.’
Donald Trump, President of the United States, delivers a joint address to Congress on the 4th. / AFP Yonhap News
‘The semiconductor law, prepared by the Biden administration in August 2022, involves providing a total of $52.7 billion in subsidies and R&D support over five years to companies building semiconductor-related facilities in the U.S., with the core being to support companies that make large-scale investments and produce semiconductors in the U.S.’
‘Nonetheless, Trump believes that imposing tariffs can achieve subsidy effects. His logic is that foreign companies would be compelled to build factories in the U.S. to avoid the tariffs. In his speech, Trump noted, “If foreign companies come to the U.S., they don’t have to pay tariffs. They should build and produce in the U.S.,” pointing to America First policies securing $1.7 trillion in investments as a result of his election victory.’
‘Trump highlighted TSMC’s recent $100 billion investment announcement after meeting with him at the White House on the 3rd as an example. Prior to TSMC’s announcement, Trump had warned of imposing at least a 25% tariff on semiconductors entering the U.S. The prevalent analysis is that TSMC’s decision was made to avoid such tariffs. Secretary of Commerce Howard Lutnick explained that “TSMC came to the U.S. because they could avoid tariffs.”‘
‘Meanwhile, towards its end, the Biden administration confirmed subsidies under the semiconductor law, allotting $4.75 billion (about 6.93 trillion won) to Samsung Electronics and $458 million (about 670 billion won) to SK Hynix. Reuters reported concerns among some officials that Trump might nullify these binding subsidy agreements made during Biden’s term. However, Bloomberg noted that numerous Republican lawmakers had supported the semiconductor law, and factories benefiting from it exist strongly in Republican-supporting regions, suggesting Trump may struggle to gather the congressional votes needed for repeal.’