Global semiconductor companies which are already cutting billions of dollars in planned capital spending as a result of softening demand from EV makers and smartphone manufacturers, are now being further hit with the possibility of government direct funding being cut.
The Trump administration is believed to be planning to renegotiate the Chips and Science Act deals, resulting in Korean chipmakers such as Samsung and SK Hynix facing an uncertain future.
The White House is reported to be reviewing federal subsidies that the previous administration promised global chip makers for their investment in the US, reported Reuters.
It is reviewing the terms underpinning the $39 billion (A$61.41 billion) chips programme subsidies, including the condition that recipients must use unionized labour to build factories and provide affordable childcare for factory workers.
Samsung Electronics and SK Hynix already have advanced semiconductor production facilities currently under construction in the US.
Samsung, the world’s largest memory chipmaker, has pledged to invest over $40 billion (A$62.98 billion) to build two new advanced chip manufacturing facilities in Taylor, Texas. The previous administration agreed to award it $4.74 billion (A$7.46 billion) in direct funding.
SK Hynix also plans to build a chip packaging plant in Indiana with an investment of $3.87 billion, with the Biden administration promising up to $450 million (A$708.55 billion) in direct funding.
One of the points that is causing frustration to the new administration is that the recipients of large amounts of direct funding are also expanding operations in China, whereas the US’s chips programme is intended to strengthen the country’s hand against China.
The global semiconductor market was valued at A$1.01 trillion in 2024, according to the World Semiconductor Trade Statistics, up 19% year-on-year.
Investment plans for each of the world’s top 10 global semiconductor companies for fiscal 2024 show an aggregate 2% decrease year-over-year to A$199.21 billion, an approximately A$15.36 billion decrease from their May estimates, reported Nikkei Asia.
Samsung Electronics’ semiconductor investments for 2024 decreased 1% to about A$56.55 billion, the first decline in five years.
SK Hynix meanwhile plans to invest 103 trillion won (A$113.5 billion) over the five years through 2028 in areas such as memory chips for AI.
