Samsung Elec may receive up to $2.6 bn in incentives for chip production in U.S.

2023.03.02 10:09:02 | 2023.03.02 10:20:17

The construction site for Samsung Electronics‘ chip plant in Taylor, Texas, U.S. [Photo provided by Samsung Electronics]이미지 확대

The construction site for Samsung Electronics‘ chip plant in Taylor, Texas, U.S. [Photo provided by Samsung Electronics]

Samsung Electronics Co. that is building a chip plant in Taylor, Texas, in the U.S., may receive up to 3.4 trillion won ($2.6 billion) in incentives from the U.S. federal government as the Joe Biden administration has rolled up its sleeves to attract global chipmakers with massive grants for “national security.”

Under the Notice of Funding Opportunity (NOFO) for semiconductor facilities as part of the CHIPS and Science Act released by the U.S. Department of Commerce on Tuesday, local time, the U.S. government plans to spend $52.7 billion altogether, including $39 billion in chip production support, $13.2 billion in research and development and workforce training, and $500 million in enhancing global supply chain. It will also set aside $75 billion for direct loans and loan guarantees.

It is the first time that the U.S. government announced details, including application procedures and conditions for eligibility, on the incentives for chip production.

The U.S. government will also launch a funding process for chip materials and equipment production in the first half of this year following procedures for advanced semiconductor plants on March 31 and for current-generation, mature-node, or back-end manufacturing facilities on June 26.

According to the notice, the incentives will be offered through direct funding, loans, and loan guarantees. Direct funding usually accounts for 5 to 15 percent of the entire project expenditures. Loans and loan guarantees have no limit in funding but they don’t exceed 35 percent of the expenditures.

Samsung Electronics, which is investing $17 billion to build a chip facility in Taylor, is expected to receive $850 million~$2.6 billion in direct incentives from the U.S. federal government. The amount can go up to $5.95 billion when combining loans and loan guarantees.

The NOFO, however, specifies that any recipient must refund the incentives they were granted if the incentives get involved in damaging the U.S. national security, which suggests that Korean chipmakers may find it hard to invest in their Chinese plants if they join the U.S. incentive program.

By Choi Seung-jin, Lee Yoo-jin and, Han Yubin

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