trump's chips act threat rattles korean semiconductor giants
Washington, Tuesday, 25 March 2025.
A possible trump administration may axe the US Chips Act. He considers it a waste of money. This move could jeopardize billions in subsidies earmarked for firms like Samsung and SK Hynix. These companies made substantial US investments based on the act. Samsung spent almost $7 million lobbying in the US in 2024 alone. The potential policy shift could impact expansion plans and stock valuations for all companies receiving funds, including TSMC. South Korean officials are scrambling to protect their investments.
Lobbying efforts and potential losses
South Korean lawmakers had dispatched a large delegation to President Trump’s inauguration in January 2025 [1]. Their goal was to lobby on semiconductor-related issues, ensuring South Korea’s stance on the Chips Act and Inflation Reduction Act was clear to US officials [1]. Kim Seok-ki emphasized the delegation’s commitment to protecting Korean firms from potential losses and boosting investment confidence [1]. Samsung was slated to receive $6.4 billion in direct subsidies under the Chips Act to enhance the US semiconductor supply chain [1]. They also planned to apply for investment tax credits, covering up to 25% of qualified capital expenditure [1].
Impact on sk hynix and broader strategy
SK Hynix was also set to receive $450 million from the US Commerce Department to build an advanced chip packaging plant and AI research center in Indiana [1]. Scrapping the Chips Act could impede SK Hynix’s advanced packaging project and its overall US production strategy [1]. Analysts suggest South Korean firms may need to reassess their global strategies given the complex global political and economic landscape [1]. They should move away from relying on US government lobbying and targeted suppression of Chinese firms [1].
Tariffs as leverage
Defense contractor Steve Glinert suggests Trump could use tariffs on foreign-produced chips, in the 10-20% range, as a protective measure to augment subsidies [7]. He believes Trump can ensure TSMC and Samsung complete their investments through the threat of punitive tariffs if they don’t [7]. Glinert also notes the Chips Act’s implementation has become unnecessarily complex, with regulatory burdens functioning as an implicit tax [7]. Excessive financial and technical disclosure requirements, environmental compliance, and Davis Bacon Act wage requirements further complicate the process [7].
tsmc’s arizona expansion
TSMC announced plans to expand its Phoenix, Arizona site, including a third fab, requiring an additional $15 billion investment [8]. Construction is expected to begin in 2026 [8]. The initial investment phase, valued at $12 billion and announced in 2023, is nearing completion [8]. The “Taiwan Town” project, designed to accommodate TSMC’s workforce, is planned to be completed by 2028 [8]. These investments highlight TSMC’s commitment to the US market, but the Chips Act repeal could introduce uncertainty [8].