Still a long way to go
Samsung gets $6.4 billion in grant from US
The U.S. announced a plan to provide Samsung Electronics with $6.4 billion in subsidies to help facilitate its bid to build advanced semiconductor facilities in Austin, Texas. The plan, unveiled by the U.S. Department of Commerce on Monday, is largely meant to encourage the Korean tech giant to invest in the U.S. Samsung is poised to pour more than $40 billion over the next 10 years into the U.S.
At face value, Samsung’s grant is smaller than those allotted to Intel and Taiwan Semiconductor Manufacturing Co. (TSMC). Yet, the ratio of the subsidy in regard to the investment stands at 16 percent, far exceeding both Intel and TSMC. Intel is set to invest $100 billion with an $8.5 billion grant, equivalent to 8.5 percent of the investment. TSMC is subject to receive a subsidy of $6.6 billion compared to its investment of $65 billion. This can be taken to mean the U.S. administration recognized Samsung’s prestige as the world’s No. 1 memory chip maker.
The U.S. has become a new battleground for major chip producers. Its provision of such huge grants to semiconductor manufacturers investing in the U.S. is part of an adroit global strategy to maintain its upper hand in the crucial chip sector. The U.S. has been pushing ambitiously for the project to increase domestic production of major chip items in a bid to once again achieve hegemony in the chip industry over its East Asian rivals by reshaping the global chip supply network.
“The whole chain, R&D to packaging, is concentrated in a couple of Asian locations and that leaves the U.S. supply chain incredibly vulnerable to disruption. That’s untenable,” Commerce Secretary Gina Raimondo said ahead of the announcement. “We are all making these investments which will allow the United States to once again lead the world.”
The U.S.’ vision got the green light with positive responses from Samsung and TSMC, the world’s two largest chip firms. An enormous semiconductor synergy effect is expected with the envisioned setup of foundry facilities on U.S. soil. They will be manufacturing chips for supply to world-class companies such as Nvidia, Qualcomm, Apple and their related affiliates.
The demand for advanced chips has been increasing exponentially, boosted by the drastic evolution of the artificial intelligence industry. Currently, the demand for next-generation chips such as high-bandwidth memory (HBM) and process-in-memory (PIM) has been expanding phenomenally, triggering a shortage of supply.
Americans will be able to benefit from more job opportunities. More than 20,000 jobs will be generated with the investment by Samsung alone. The Semiconductor Industry Association of the U.S. estimates that more than 120,000 jobs will be created in the chip sector thanks to combined investments from Samsung, Intel and TSMC by 2030.
More enterprises offer assistance and scholarships to U.S. universities so as to bolster their research and development activities to secure more talented personnel in the future. Samsung has already been making huge investments to nurture students at colleges in Taylor and Austin. The recent investment will boost Samsung’s bid to become the world’s No. 1 foundry maker, attracting major global firms as its clients. Despite this, however, Samsung has still got a long way to go, given its rivals like Intel and TSMC have been expanding the foundation of their AI networks, riding on the vehement support of their respective governments.
What about the case of South Korea? Much talk, no action. It is time to offer substantial and feasible assistance to lift the semiconductor sector. Deregulation is necessary to accommodate relevant facilities. Discussions should focus on how to enable firms to receive the proper amount of subsidies from the government. In the past, such efforts faced setbacks amid anti-business sentiment. It is time for Korea Inc. to join forces to boost the chip industry substantially. Such efforts should be made beyond partisan interests and affiliations, as the chip industry has grave implications for the future of the nation.