Former President Donald Trump, the Republican presidential candidate, has criticized the Biden administration’s semiconductor support law (CHIPS Act) subsidies, which have encouraged investments in the U.S. by companies such as Samsung Electronics and SK Hynix. Trump stated that he would instead use tariffs to compel foreign companies to build factories in the U.S. With subsidies for domestic semiconductor companies’ U.S. factories still pending, a potential second Trump administration could pose significant challenges to these investments.
According to the New York Times (NYT) on Oct. 27 (local time), Trump, in an interview with podcast host Joe Rogan on Oct. 25, criticized the semiconductor law, saying, “The semiconductor deal is really bad,” and “We invested billions of dollars in wealthy companies.” He added, “We didn’t have to pay a dime,” and “If we impose high tariffs, they will come and build semiconductor factories for free.”
Local sources indicated, “Considering that subsidies for U.S. factories of Samsung Electronics and SK Hynix have not yet been disbursed, Trump’s election would signal significant turmoil.”
The CHIPS Act, enacted with bipartisan support in Congress in 2022 under the Biden administration, provides a total of $52.7 billion over five years, including $39 billion in semiconductor production subsidies and $13.2 billion in research and development (R&D) grants, to semiconductor companies investing in the U.S. In April, Samsung Electronics was confirmed to receive $6.4 billion in semiconductor subsidies from the U.S. government, the third-largest amount after Intel ($8.5 billion) and Taiwan’s TSMC ($6.6 billion).
Trump also targeted TSMC, the world’s largest foundry (semiconductor contract manufacturing) company, saying, “They stole 95% of our business, and it’s now in Taiwan. Taiwan is doing incredibly well, and it’s solely because of our stupid politicians. We lost the semiconductor business, and now we have to pay. That’s not how it should be. We should make them spend their money in the U.S.”
Trump reiterated his previous stance that Taiwan should pay for U.S. defense. He pointed out, “They want us to protect them and want protection. They don’t pay for protection.”
If Trump is elected and semiconductor tariffs are imposed, Samsung Electronics and SK Hynix will face immediate challenges. Samsung Electronics is set to receive $6.4 billion (approximately 8.76 trillion won) for building a foundry in Taylor, Texas, while SK Hynix is to receive $450 million (approximately 620 billion won) for a packaging facility in Indiana. However, with the CHIPS Act subsidies yet to be disbursed, the promised “carrot” may disappear, leaving only the “stick.” Particularly for Samsung Electronics, which recently delayed the completion of the Taylor fab due to poor performance and weak orders, a comprehensive revision of its global semiconductor strategy is unavoidable. The worst-case scenario of building a factory without guaranteed external orders for sub-3nm ultra-fine processes must be avoided.
The impact is also unavoidable for major domestic industries such as automobiles and batteries. While Hyundai Motor and Kia are meeting local demand at their plants in Alabama and Georgia, a significant portion of vehicles sold in the U.S. relies on domestic production. High tariffs would reduce profits or necessitate higher vehicle prices. The battery industry is also closely monitoring the “Trump risk.” Domestic battery companies have established local production systems with U.S. customers to receive incentives under the IRA.
There is also analysis that the policy of erecting tariff barriers could harm U.S. companies. Intel, which has invested $100 billion (approximately 138 trillion won) in the U.S. alone, is a case in point. In Silicon Valley and Washington, D.C., it is openly claimed that the CHIPS Act was made for Intel. Intel has been promised $8.5 billion (approximately 11.8 trillion won) in direct subsidies. However, if Intel, whose management situation has deteriorated, does not receive subsidies on time, it could face bankruptcy. Other companies, such as Micron, which is set to receive $6.1 billion in subsidies, and defense semiconductor design and manufacturing companies that rely on policy funds and orders, will also be significantly impacted.
The fact that the entire semiconductor equipment and materials ecosystem is scattered across Asia and Europe could also act as a shackle for the U.S. industry. Imposing high tariffs on foreign equipment and materials, such as those from ASML and Tokyo Electron, would inevitably lead to skyrocketing investment costs. This would result in semiconductor supply shortages and price increases. The burden on U.S. tech companies, which are making massive investments in artificial intelligence (AI), would also increase. The U.S. holds over 70% of the cloud market, essential for generative AI learning and computation, and cloud providers are the largest consumers of advanced semiconductors such as AI chipsets.
Foreign media also believe that Trump’s tariffs could harm the entire U.S. industry. The New York Times (NYT) pointed out that Trump’s argument does not consider how much the U.S. relies on foreign semiconductors, such as those from Taiwan, while producing only 10% of global semiconductors.
