Taipei, Taiwan – With just weeks left in office, outgoing President Joe Biden and his team are scrambling to secure billions of dollars in funding to move chip manufacturing back to the United States.
The CHIPS and Science Act of 2022, signed by Biden, secures $280 billion in funding to boost domestic semiconductor research and manufacturing in the United States, including $39 billion in grants, loans, and tax credits for both U.S. and foreign companies. .
The law received bipartisan support in Congress and was broadly welcomed by both Democratic and Republican-leaning states seeking to attract cutting-edge manufacturing facilities and create jobs.
But the future of the CHIPS Act now appears uncertain ahead of President-elect Donald Trump’s Jan. 20 inauguration, as the Biden administration races to finalize complex negotiations with chipmakers and distribute the funds.
Just before the election, President Trump appeared on the Joe Rogan Experience podcast and called the bill “so bad.”
“We have invested billions of dollars for wealthy corporations,” Trump said.
President Trump also accused places like Taiwan, home to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading producer of advanced semiconductors, of “stealing” the chip industry from the United States.
Most of the 24 companies receiving funds under the CHIPS Act are U.S. companies, the top of which is Intel, which secured about $7.9 billion in direct funding from the U.S. Department of Commerce last month.
Four East Asian companies, including Taiwan’s TSMC and GlobalWafers and South Korea’s Samsung and SK Hynix, also signed the CHIPS Act.
In recent weeks, the Commerce Department finalized deals with TSMC and GlobalWafers after signing a non-binding memorandum of agreement.
TSMC secured $6.6 billion in grants and $5 billion in loans to build four facilities in Arizona, while GlobalWafers finalized a deal to receive $406 million to build facilities in Missouri and Texas.
Since the CHIPS Act has passed the U.S. Congress, there is analysis that President Trump cannot unilaterally abolish the CHIPS Act, but it could make it difficult for the bill to function as intended.
As president, he could block or delay distributing funds from the Commerce Department as part of a cost-cutting effort led by a so-called new government efficiency division led by tech mogul Elon Musk and entrepreneur Vivek Ramaswamy.
Dan Hutcheson, vice president of California-based Tech Insights, said Trump may try to renegotiate some terms of the CHIPS Act or repackage elements of it under new legislation.
Hutchison said President Trump used a similar tactic in 2018, signing the U.S.-Mexico-Canada Agreement to replace the substantially similar North American Free Trade Agreement (NAFTA).
The Trump administration borrowed heavily from NAFTA and the Trans-Pacific Partnership (TPP), a free trade agreement with Asia proposed by former President Barack Obama, to revise the agreement.
“What (Trump) really wants is to put his brand on everything,” Hutchison told Al Jazeera. “You can see that in all his hotels and resorts and everything else.”
“This is his typical modus operandi, and we can expect this to happen once the CHIPS Act goes into effect.”
Among the CHIPS Act’s Asian partners, Taiwan’s TSMC has made the most visible effort to increase U.S. investment.
After previously signing a non-binding memorandum of agreement, the Taiwanese company last month secured $6.6 billion in grants and $5 billion in loans to build four semiconductor manufacturing plants in Arizona.
Other Asian companies have moved less quickly due to delays over the past two years and their own business challenges, according to Chim Lee, senior China and Asia analyst at the Economist Intelligence Unit.
Last April, Samsung signed a non-binding deal to spend $45 billion to expand its production facilities in Texas in return for $6.4 billion in subsidies.
Eight months later, no progress has been announced on the agreement.
Last October, South Korean tech giant Samsung Electronics issued a rare public apology after reporting disappointing third-quarter results amid competition from Chinese rivals.
Additionally, SK Hynix’s non-binding agreements with Global Wafers, announced in April and July, respectively, to build a $3.87 billion facility in Indiana and invest $4 billion in silicon wafer production in Texas and Missouri. There is also no further update on the status of the contract.
Yachi Chiang, a technology law professor at National Taiwan Ocean University, said many in Taiwan think the Trump administration will ask TSMC to invest more than the $65 billion it promised to build three Arizona plants in return for U.S. subsidies. .
The EIU’s Lee said a change in government could make companies less willing to expand negotiations further.
“Renegotiation could extend, if not undermine, some of the distribution of funds. It has already taken more than two years since the bill was passed. Businesses don’t like waiting and they don’t like uncertainty,” he told Al Jazeera.
“Of course this goes both ways. “For some companies, the cost of producing in the U.S. is so high that they won’t commit to investing without a strong incentive.”
Asian technology companies have other incentives to keep production closer to home.
South Korea and Taiwan enacted equivalent legislation to the CHIPS Act last year to expand subsidies and tax breaks for companies investing locally.
Japan approved $3.9 billion in subsidies to domestic chipmaker Rapidus earlier this year, and Tokyo aims to spend up to $65 billion in public and private sector funds to catch up with its chip-making neighbors.
Meanwhile, China recently pledged $45 billion to bolster its chip industry in the face of U.S. export controls and other attempts to curb its acquisition of advanced technologies.
Taiwan’s Ministry of Economic Affairs told Al Jazeera that it would not be appropriate to comment on the CHIPS law before President Trump takes office.
But Taipei has signaled to Trump that it is listening to his concerns.
Shortly after Trump’s election, The Financial Times announced that Taiwan would sign a $15 billion arms purchase deal to show it was “serious” about its defense, following criticism that the country should spend more on its military. It was reported that they were considering it.
At the same time, there is political deadlock across East Asia, creating further uncertainty about how governments will respond to the Trump administration and its economic demands.
Taiwan’s President William Lai Ching-te can communicate with Trump as head of state, but at home he is restricted on policy by the opposition party, which holds a majority in the legislature.
In Korea, while the Constitutional Court is considering whether to expel Rep. Yoon Seok-yeol, who was impeached for declaring short-term martial law, Rep. Han Deok-soo is acting as a caretaker leader.
In Japan, Prime Minister Shigeru Ishiba’s Liberal Democratic Party is leading a minority government after losing its majority in parliament following a snap election in October.
As the second election for Japan’s House of Councilors is scheduled for next year, uncertainty is expected to increase further.
William Reinsch, senior adviser for the economics program at the Center for Strategic and International Studies, said the CHIPS law is just one of many issues on the minds of East Asian leaders.
“I expect South Korea, Taiwan and Japan to look at the big picture of how best to maintain good relations with the United States rather than just focusing on the CHIPS law,” Reinsch told Al Jazeera.
“We should expect them to invest more in the United States, spend more on the defense budget, and think seriously about how they can best align with U.S. policy with regard to China.”
