Samsung and SK Hynix are being urged to accept a challenging reality regarding the US CHIPS Act.
In-Seol Jeong and Je
March 28, 202
A Samsung employee inspects a chip wafer.
South Korean chipmakers expressed deep concerns on Tuesday about the detailed guidelines of the US Science and CHIPS Act, stating that they are being forced to bite off more than they can chew in order to receive incentives and subsidies.
It was mentioned that the allure of acquiring state funding to construct new establishments in the nation could greatly diminish the need to divulge classified business information to the US government, which is considered as sensitive data.
Semiconductor firms are required by the latest guidelines unveiled on Monday by the US Department of Commerce to provide detailed profit and revenue projections in order to evaluate their applications for new chipmaking plans. Semiconductor firms are hoping to gain access to the CHIPS Act under the guidelines unveiled on Monday by the US Department of Commerce.
Prior to finalizing a comprehensive application, individuals seeking can employ an Excel-oriented instrument supplied by the department to present a preliminary application and initiate a conversation with United States authorities.
The included data necessary for submission comprises the anticipated yearly fluctuations in prices, the projected selling price of chips, the rates of yield, the volumes of production, the rates of operation, the quantity of wafers, and the required information.
The information pertaining to semiconductor materials like silicon, nitrogen, oxygen, sulfur, and associated expenses, which companies will be required to reveal, is considered confidential and not included in their financial reports.
INCREASINGLY FRUSTRATED.
The comprehensive instructions of the US CHIPS Act are becoming more and more vexing for South Korea, which is the domicile of the world’s two biggest memory chip manufacturers, Samsung Electronics Co. And SK Hynix Inc.
“US corporations such as Intel will also encounter difficulties in accepting,” expressed an executive from a Korean chip manufacturing company. “Given that we are being urged to expose ourselves to substantial business hazards, we are uncertain about the benefits we can attain.” Certain prerequisites are scarcely agreeable.
Korea’s government officials have already stated that the program subsidy, which amounts to $53 billion, is given for foreign investment and comes with unusual and “unconventional” conditions.
Seoul’s Industry and Trade Minister Lee Chang-yang stated earlier this month that the allure of investing in the United States is diminishing, attributing it to the elevated expenses associated with investment.
Washington stated that the information and financial statements related to semiconductor production would be the “critical part” of the evaluation program that applicants need to submit.
President Joe Biden of the United States signs the CHIPS and Science Act of 2022.
In the United States, Samsung is constructing a $17 billion foundry or contract chipmaking facility in Taylor, Texas to manufacture state-of-the-art semiconductors.
Last year, SK Group, which owns Hynix SK, pledged to invest $22 billion in advanced packaging facilities, as well as semiconductor research and development in the US.
Other companies expected to apply for CHIPS Act funding include Intel Corp. And Taiwan Semiconductor Manufacturing Company Ltd., Better known as TSMC.
Companies that accept subsidies from the US government must also share a portion of their initial profits that exceed a mutually agreed-upon threshold.
“The profit-sharing provision is basically depriving them of what they provide,” stated an industry representative.
MICROSCOPIC SCRUTINY.
The CHIPS for America team, appointed by the Commerce Department, will assess the applications of semiconductor manufacturers, and it comprises a group of experts in semiconductor technology and finance.
Korea (left) and his American counterpart will hold a summit meeting in April.
Kevin Quinn, a previous high-ranking technology investment banker at Goldman Sachs & Co, has joined the team headed by Todd Fisher, an experienced executive from private equity firm KKR & Co.
Among the tech industry, there are notable figures such as Dan Kim, who used to be the vice president of SK Hynix and also worked for the US International Trade Commission (USITC), and Mike O’Brien from Synopsys, which is considered the top semiconductor design tool company in the world.
Industry watchers have stated that Korean chipmakers are seeking government officials to assist them in discussing the details on how to apply the CHIPS Act guidelines to their US counterparts.
Korean President Yoon Suk Yeol, accompanied by a group of chipmakers’ chief executives, is scheduled to travel to the United States next month for a summit meeting with Joe Biden on April 26. The purpose of the meeting is to address complex matters pertaining to the CHIPS Act and the Inflation Reduction Act.