The U.S. government has decided to reduce subsidies for Samsung Electronics’ semiconductor facilities in the United States by about 26%. This contrasts with its decision to grant SK Hynix up to $500 million (about 725 billion won) in subsidies and government loans the day before.
The U.S. Department of Commerce on Dec. 20 announced that Samsung would receive $4.745 billion in subsidies under the CHIPS Act. This is a 26% decrease from the $6.4 billion agreed upon in April during the preliminary memorandum of terms (PMT) signing.
Samsung’s subsidy-to-investment ratio is about 13%. While higher than TSMC, Intel, and Micron, the scale of the reduction is the largest. Taiwan’s TSMC ($6.6 billion) and Micron ($6.165 billion) saw little to no changes from their PMT agreements. Intel’s subsidies were finalized at $7.86 billion, slightly down from $8.5 billion, with a smaller reduction than Samsung.
The Commerce Department recently granted SK Hynix $458 million in subsidies and up to $500 million in loans. SK Hynix’s subsidy-to-investment ratio is 11.8%, higher than the 11.6% agreed upon in the PMT phase, while Samsung saw a decrease in its ratio.
The subsidy cut for Samsung is linked to its reduced U.S. investment plans. In April, Samsung Electronics had announced plans to expand its semiconductor investment in Taylor, Texas, from $17 billion to $44 billion by 2030. However, according to the Commerce Department’s announcement, Samsung’s investment in two advanced semiconductor manufacturing plants, R&D facilities in Taylor, and an expansion of its existing production site in Austin will now total $37 billion, a 16% reduction from the initial plan outlined in the PMT agreement.
A Commerce Department spokesperson told Reuters that the subsidy adjustment was made to reflect “market conditions and the scope of the company’s investments.” Samsung said to Bloomberg, “Our mid-to-long-term investment plan has been adjusted to optimize overall investment efficiency.” With Samsung cutting its investment by 16%, the subsidies were reduced by 26%.
