Recently, the U.S. Department of Commerce announced the details of the latest application of the "Chip and Science Act" for subsidies for semiconductor companies to set up factories in the United States. It contains a number of content that requires companies to disclose key business information, which has aroused concerns and reactions from companies from various countries. The media in South Korea and Taiwan said that the United States requires the release of many commercial secrets, and South Korea's major semiconductor companies are in a dilemma. Taiwan's semiconductor industry has become a "pawn" or "chip" of the United States.
US requires businesses to submit details
According to reports, according to the "Chip and Science Act", semiconductor companies seeking US funding will be required to submit details of chip factories, as well as detailed forecasts of revenue and profits, in order to evaluate applications. The Chips and Science Act will provide $53 billion in funding aimed at helping the United States restore its manufacturing prowess in the semiconductor field. Companies planning to set up cutting-edge chip factories in the United States can start applying for the funds on March 31. These financial statements will be used to assess the feasibility, financial structure, economic return and risks of the proposed projects to determine the amount, type and terms of the grant, the Commerce Department said.
In addition, companies applying for subsidies are also required to submit key business secrets, such as the production capacity of various types of wafers in the factory, operating rate, sales price in the first year of production, future annual output and sales price increases and decreases, etc. , and inform the rate of non-defective qualified products. If the revenue and profit of the new plant are "much higher than forecast", the guidance document also requires the manufacturer to return a part of the profit. Companies applying for subsidies are required not to use federal funds for dividends or stock repurchases, and must submit relevant plans for repurchasing stocks within the next five years. What is more noteworthy is that companies receiving subsidies will be restricted from expanding semiconductor manufacturing capacity in the so-called "countries of concern" in the next 10 years, and the list of "countries of concern" includes China.
These requirements are considered too stringent, and some companies even need to disclose commercial secrets. South Korea's "Seoul Economics" reported that investing in semiconductor factories in the United States to obtain government subsidies must provide core financial information such as cash flow and core business secrets such as production and sales. Major Korean semiconductor companies are caught in two situations.
The Wall Street Journal also stated that the U.S. Department of Commerce also requires companies to disclose the materials used to produce chips and the labor costs, public utility costs, research and development costs, and the scale of subsidies and loans they are receiving for factory operations. It is worth noting that if the revenue and profit of the new plant are "much higher than forecast", the guidance document also requires the manufacturer to return a part of the profit. In addition, companies applying for subsidies are required not to use federal funds for dividends or stock repurchases, and must submit relevant plans to repurchase stocks within the next 5 years. More notably, subsidized companies will be restricted from expanding semiconductor manufacturing capacity in so-called “countries of concern” over the next 10 years, and the list of “countries of concern” includes China.
Korean chipmakers seek win-win approach
Taiwan's "Economic Daily" stated on the 28th that the so-called "capped profit sharing" clause proposed by the United States is the part that the industry is most concerned about. They are worried that the profit sharing ratio is too high. At the same time, the island is very worried about TSMC's "de-Taiwanization" under the temptation of the United States. On December 6 last year, TSMC held a moving ceremony at its new plant in Arizona, USA, and installed the first batch of equipment. The first phase of the project plans to mass-produce 5-nanometer process chips, and the second phase plans to mass-produce the most advanced 3-nanometer process chips
Although the U.S. government continues to exert pressure, South Korean semiconductor companies are still reluctant to give up the Chinese market. "Samsung executives visited China one after another to find solutions to semiconductor problems," South Korea's "Electronic News" reported on the 28th that Samsung Electronics Chairman Lee Jae-yong and SK Group Chairman Choi Tae-won went to China to participate in important events in China in an attempt to find solutions. Solutions for the future development of the Korean semiconductor industry, which is sandwiched between the United States and China. According to the report, South Korean companies are facing the situation of being forced to stay away from the largest sales market - China, and are trying to construct a compromise plan on how to expand investment in China and maintain friendly relations with China under pressure from the United States.
South Korea's "Asia Daily" reported on March 30 that the heads of the four major Korean groups, including Samsung Electronics Chairman Lee Jae-yong, SK Group Chairman Choi Tae-won, Hyundai Motor Group Chairman Chung Eui-sun, and LG Chairman Koo Kwang-mo, will form an economic group. The diplomatic mission will accompany Yin Xiyue to visit the United States next month, and seek solutions with the United States that the new law on the semiconductor industry may affect Korean companies, and explore new ways of cooperation.
According to news from the Korean economic circles, the National Federation of Economics of Korea has recently publicly solicited the "2023 U.S. Economic Mission" from member companies, and the participants are companies that have established business relations with the United States. Enterprises that sign cooperation agreements with the United States in the field of semiconductor industry or jointly promote projects are given priority.
The economic mission will visit Washington DC and surrounding cities in the United States from April 24 to 28. According to the FEC, the diplomatic envoys will attend a series of activities including the Korea-U.S. Advanced Industry Business Forum attended by high-level Korean and U.S. governments and entrepreneurs, and the Korea-U.S. Industrial Chain Roundtable Conference attended by start-ups in the technology field.
From the fourth quarter of the first half of the year to March this year, affected by the US "Chip and Science Act", the income of South Korean semiconductor companies has continued to decline. For the huge market in China and the subsidies from the US government, can Korean semiconductor companies find discounts? The method in it. We think it's hard. Because the contradictions between China and the United States are irreconcilable. I believe that in the near future, Korean semiconductor companies will make a choice
Difficulties for semiconductor companies
"Even semiconductor sales prices must be made public? The U.S. government's approach is too much, and Korean companies are at a loss." South Korea's "Financial News" reported on the 28th that because the U.S. government requires semiconductor companies that receive subsidies to provide cash flow and other Enterprise data, Korean semiconductor companies are in panic. Korean companies such as Samsung Electronics and SK Hynix are in a dilemma in the face of the company's core financial information and production and sales status or being forced to provide to the US government.
Some insiders in the Korean semiconductor industry said that the US government is trying to reorganize the global semiconductor supply chain. It is not uncommon for the United States to ask companies from other countries to provide corporate information for the purpose of developing its own industries and creating more jobs. Some experts believe that since it is impossible to predict how much subsidies the U.S. government will give companies, considering the need to share excess profits, labor union burdens, and U.S. investment restrictions on Chinese semiconductors, etc., whether Korean semiconductor companies can benefit from U.S. financial subsidies or not unknown.
Taiwan's "Economic Daily" published an editorial on the 28th, saying that the United States has suppressed the development of the semiconductor industry in mainland China in various ways. Influence. Taiwan's semiconductor industry has become a "chess piece" or "chip" of the United States. As a sharp weapon to contain opponents, it may also become an abandoned piece at a certain moment.
The article also stated that when the United States required semiconductors and even other high-tech supply chains to move to the United States to set up factories, some Taiwanese supply chain operators "voluntarily" cooperated to set up factories and accepted costly production conditions. However, when Taiwanese companies go to the United States to set up factories, the local government may impose more supporting requirements, which will further affect the operating efficiency of the industry's production in the United States.
Summarize
Both China and the United States are seeking investment from overseas semiconductor companies to set up factories. However, since each manufacturer has different interests, it first depends on whether they are willing to keep their chip factories in China or the United States. China's tax incentives, engineer bonuses, and the integrity of the industrial chain are what these manufacturers need, but they also need American funds, and most of these manufacturers cannot technically avoid the "long-arm jurisdiction" of the United States. Due to the special situation of Taiwanese semiconductor companies and South Korean semiconductor companies, the US government will not let them go, and at the same time will sanction or restrain their development in mainland China. The future result may be that the United States develops its own chip research and development capabilities and production capabilities, while allies may be damaged. The U.S. government will not let the huge amount of money consumed by the U.S. "Chips and Science Act" be spent in vain.
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