TL/DR –
Foreign giants such as Taiwan Semiconductor Manufacturing Company, Samsung, and LG, initially wooed to invest in the U.S. through incentives provided by the CHIPS Act and the Inflation Reduction Act, are expressing concerns over high costs and subsidy uncertainties. Samsung’s $17 billion chipmaking plant in Texas saw costs rise by over $8 billion due to inflation, while Taiwan Semiconductor Manufacturing Company’s projects in Arizona are delayed, with ongoing negotiations with the U.S. government over incentives and tax credits. South Korean battery manufacturers for electric vehicles are also slowing and reassessing their investments due to rising costs, the slower-than-expected adoption of EVs, and potential political risks ahead of upcoming U.S. elections.
U.S. Chip Manufacturing Projects Face High Costs, Uncertainty
Washington’s CHIPS Act and the Inflation Reduction Act incentivized domestic manufacturing, attracting major players like Taiwan Semiconductor Manufacturing Company (TSMC), Samsung, and LG to invest in the U.S. However, these companies now face high project costs and are uncertain about subsidies.
Samsung Electronics, the top memory chipmaker, declared $17 billion investment for a new advanced chipmaking plant in Texas. However, inflation raised costs by over $8 billion, according to Reuters.
Operations for TSMC’s Arizona project, initially celebrated by President Joe Biden, are expected to start from 2027 or 2028, later than the original 2026 forecast. The company is still discussing incentives and tax credits with the U.S. government.
In contrast, TSMC’s Japan project is on schedule, with plans for a second plant announced. The company found the Japanese government easier to work with, sources told Reuters.
South Korean EV battery manufacturers are reassessing their U.S. investments due to rising costs and macroeconomic uncertainty. Ford and SK Group’s battery factories in Kentucky and Tennessee are experiencing delays.
LG Energy Solutions is also scaling back U.S. investments. The firm laid off 170 workers at its Michigan plant and shelved plans for a fourth battery plant.
Automakers like Ford and General Motors are less hopeful about the growth rate for EV adoption this year. Possible constraints include barriers to accessing tax credits from the U.S. Inflation Reduction Act and increased interest rates affecting financing.
Executives are also concerned about potential policy changes following the U.S. presidential election in November, according to The Korea Times.
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