Samsung, Texan, Korean and U.S. flags hang in front of the Samsung semiconductor chip plant in Taylor, Texas, on Jan. 2, 2024. [EPA/YONHAP]

 
The U.S. Senate passed a tax bill Tuesday that would increase tax credits for semiconductor companies building new factories in the United States from 25 to 35 percent ― a move poised to draw in global players like Samsung Electronics and SK hynix.
 
The legislation, reported by Bloomberg and other international media, marks a strategic push to ramp up U.S. chip production by making it more financially attractive for foreign manufacturers to break ground on new facilities stateside. The expanded tax credit is expected to accelerate investment decisions by Korean chipmakers already exploring or expanding their American footprint. 
 
The original 25-percent credit was introduced under the CHIPS and Science Act of 2022, which applies to facilities that began operations after the end of 2022 or broke ground before the end of 2026. The newly proposed rate surpasses the 30-percent credit included in earlier drafts of the CHIPS Act.
 
The legislation still requires a vote in the House of Representatives, which aims to pass the bill by as early as July 4 before sending it to former President Donald Trump for signing.
 
Why the U-turn from Trump?
 
President Donald Trump, who has voiced skepticism about the CHIPS Act since the start of the year — calling it a “horrible, horrible thing” — had previously criticized the use of taxpayer money to support foreign chipmakers.
 
However, Bloomberg reported that despite Trump’s opposition, “lawmakers in both parties have shown little desire to eliminate subsidies that provide high-paying jobs in their districts, in a sector seen as critical to national security.” Trump appears to have softened his stance, in line with the broader goal of boosting domestic chip manufacturing.
 
Companies expected to benefit from the expanded tax credits include TSMC, Intel, Micron and Samsung Electronics, which have already been designated as eligible recipients under the CHIPS Act. In particular, TSMC — which pledged to expand its investments under the Trump administration — is projected to receive substantial tax relief proportional to its increased spending.
 
A Taiwanese tech outlet said the semiconductor industry in Taiwan views the tax incentive as a positive development, citing the absence of individual caps as a significant advantage over direct subsidies. Observers noted the potential for the new tax credit to provide even more substantial financial support than other incentive programs.
 
The U.S. Congressional Budget Office estimates the expanded credit could cost the federal government around $15 billion over the next decade.
 

A foundry factory owned by Samsung Electronics in Taylor, Texas [SAMSUNG ELECTRONICS]

Will Korean chipmakers benefit?
 
The measure could accelerate investment plans for Korean chipmakers already operating in the United States. Samsung Electronics is building its second foundry in Taylor, Texas, which is scheduled to begin operations next year.
 
SK hynix, which announced plans last year to construct an advanced packaging facility in West Lafayette, Indiana, is preparing to break ground. To qualify for the expanded tax credit, construction must begin before the end of next year.
 
“Since entering the U.S. market is inevitable, it’s advantageous to align with the conditions required to receive tax benefits,” said a Korean chip industry official.
 
However, some industry insiders pointed out that the benefits could be limited, as U.S.-based companies such as Intel and Micron will receive the same credits.  
 
“Hiring in the United States is already difficult, and construction costs are very high,” said another industry source, adding that logistical challenges could offset the perceived benefits of the tax incentive.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK HAE-LEE [[email protected]]